Correlation Between INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES

Can any of the company-specific risk be diversified away by investing in both INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES 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 INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INDUSTRIAL MEDICAL GASES and INTERNATIONAL BREWERIES PLC, you can compare the effects of market volatilities on INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES 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 INDUSTRIAL MEDICAL with a short position of INTERNATIONAL BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES.

Diversification Opportunities for INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES

-0.17

Correlation Coefficient

INDUSTRIAL MEDICAL  INTERNATIONAL BREWERIES

Good diversification

The 3 months correlation between INDUSTRIAL and INTERNATIONAL is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding INDUSTRIAL MEDICAL GASES and INTERNATIONAL BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL BREWERIES and INDUSTRIAL MEDICAL 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 INDUSTRIAL MEDICAL GASES are associated (or correlated) with INTERNATIONAL BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL BREWERIES has no effect on the direction of INDUSTRIAL MEDICAL i.e., INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES go up and down completely randomly.

Pair Corralation between INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES

Assuming the 90 days trading horizon INDUSTRIAL MEDICAL GASES is expected to generate 0.01 times more return on investment than INTERNATIONAL BREWERIES. However, INDUSTRIAL MEDICAL GASES is 161.16 times less risky than INTERNATIONAL BREWERIES. It trades about 0.13 of its potential returns per unit of risk. INTERNATIONAL BREWERIES PLC is currently generating about -0.04 per unit of risk. If you would invest  3,795  in INDUSTRIAL MEDICAL GASES on December 29, 2024 and sell it today you would earn a total of  5.00  from holding INDUSTRIAL MEDICAL GASES or generate 0.13% return on investment over 90 days.

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

INDUSTRIAL MEDICAL GASES  vs.  INTERNATIONAL BREWERIES PLC

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, INDUSTRIAL MEDICAL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

INTERNATIONAL BREWERIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNATIONAL BREWERIES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, INTERNATIONAL BREWERIES is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with INDUSTRIAL MEDICAL and INTERNATIONAL BREWERIES

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

The idea behind INDUSTRIAL MEDICAL GASES and INTERNATIONAL BREWERIES 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.