Correlation Between GlobalData PLC and Heavitree Brewery

Can any of the company-specific risk be diversified away by investing in both GlobalData PLC and Heavitree Brewery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GlobalData PLC and Heavitree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GlobalData PLC and Heavitree Brewery, you can compare the effects of market volatilities on GlobalData PLC and Heavitree Brewery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GlobalData PLC with a short position of Heavitree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalData PLC and Heavitree Brewery.

Diversification Opportunities for GlobalData PLC and Heavitree Brewery

0.8

Correlation Coefficient

GlobalData PLC  Heavitree Brewery

Very poor diversification

The 3 months correlation between GlobalData and Heavitree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery and GlobalData PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GlobalData PLC are associated (or correlated) with Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of GlobalData PLC i.e., GlobalData PLC and Heavitree Brewery go up and down completely randomly.

Pair Corralation between GlobalData PLC and Heavitree Brewery

Assuming the 90 days trading horizon GlobalData PLC is expected to generate 0.66 times more return on investment than Heavitree Brewery. However, GlobalData PLC is 1.52 times less risky than Heavitree Brewery. It trades about -0.12 of its potential returns per unit of risk. Heavitree Brewery is currently generating about -0.09 per unit of risk. If you would invest  18,381  in GlobalData PLC on December 26, 2024 and sell it today you would lose (3,281) from holding GlobalData PLC or give up 17.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

GlobalData PLC  vs.  Heavitree Brewery

GlobalData PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GlobalData PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Heavitree Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heavitree Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GlobalData PLC and Heavitree Brewery

The main advantage of trading using opposite GlobalData PLC and Heavitree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalData PLC position performs unexpectedly, Heavitree Brewery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Heavitree Brewery will offset losses from the drop in Heavitree Brewery's long position.

The idea behind GlobalData PLC and Heavitree Brewery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.