Correlation Between Heavitree Brewery and Bell Food

Can any of the company-specific risk be diversified away by investing in both Heavitree Brewery and Bell Food 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 Heavitree Brewery and Bell Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heavitree Brewery and Bell Food Group, you can compare the effects of market volatilities on Heavitree Brewery and Bell Food 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 Heavitree Brewery with a short position of Bell Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heavitree Brewery and Bell Food.

Diversification Opportunities for Heavitree Brewery and Bell Food

-0.04

Correlation Coefficient

Heavitree Brewery  Bell Food

Good diversification

The 3 months correlation between Heavitree and Bell is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Bell Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Food Group and Heavitree Brewery 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 Heavitree Brewery are associated (or correlated) with Bell Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Food Group has no effect on the direction of Heavitree Brewery i.e., Heavitree Brewery and Bell Food go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Bell Food

Assuming the 90 days trading horizon Heavitree Brewery is expected to generate 11.17 times less return on investment than Bell Food. But when comparing it to its historical volatility, Heavitree Brewery is 2.1 times less risky than Bell Food. It trades about 0.0 of its potential returns per unit of risk. Bell Food Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23,944  in Bell Food Group on October 9, 2024 and sell it today you would earn a total of  2,606  from holding Bell Food Group or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Heavitree Brewery  vs.  Bell Food Group

Heavitree Brewery

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bell Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bell Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bell Food is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heavitree Brewery and Bell Food

The main advantage of trading using opposite Heavitree Brewery and Bell Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heavitree Brewery position performs unexpectedly, Bell Food 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 Bell Food will offset losses from the drop in Bell Food's long position.

The idea behind Heavitree Brewery and Bell Food Group 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.