Correlation Between Heavitree Brewery and Lendinvest PLC

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

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

Diversification Opportunities for Heavitree Brewery and Lendinvest PLC

0.51

Correlation Coefficient

Heavitree Brewery  Lendinvest PLC

Very weak diversification

The 3 months correlation between Heavitree and Lendinvest is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Heavitree Brewery i.e., Heavitree Brewery and Lendinvest PLC go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Lendinvest PLC

Assuming the 90 days trading horizon Heavitree Brewery is expected to generate 0.2 times more return on investment than Lendinvest PLC. However, Heavitree Brewery is 5.07 times less risky than Lendinvest PLC. It trades about 0.0 of its potential returns per unit of risk. Lendinvest PLC is currently generating about -0.07 per unit of risk. If you would invest  27,852  in Heavitree Brewery on October 10, 2024 and sell it today you would earn a total of  148.00  from holding Heavitree Brewery or generate 0.53% return on investment over 90 days.

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

Heavitree Brewery  vs.  Lendinvest PLC

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.

Lendinvest PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendinvest PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Heavitree Brewery and Lendinvest PLC

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

The idea behind Heavitree Brewery and Lendinvest PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.