Correlation Between Heavitree Brewery and Eclectic Bar

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

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

Diversification Opportunities for Heavitree Brewery and Eclectic Bar

-0.62

Correlation Coefficient

Heavitree Brewery  Eclectic Bar

Excellent diversification

The 3 months correlation between Heavitree and Eclectic is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar 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 Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of Heavitree Brewery i.e., Heavitree Brewery and Eclectic Bar go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Eclectic Bar

If you would invest  4,660  in Eclectic Bar Group on October 8, 2024 and sell it today you would earn a total of  40.00  from holding Eclectic Bar Group or generate 0.86% return on investment over 90 days.

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

Heavitree Brewery  vs.  Eclectic Bar 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.

Eclectic Bar Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heavitree Brewery and Eclectic Bar

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

The idea behind Heavitree Brewery and Eclectic Bar 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.