Correlation Between Summit Materials and Intelligent Group

Can any of the company-specific risk be diversified away by investing in both Summit Materials and Intelligent Group 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 Summit Materials and Intelligent Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Summit Materials and Intelligent Group

-0.42

Correlation Coefficient

Summit Materials  Intelligent Group

Very good diversification

The 3 months correlation between Summit and Intelligent is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Intelligent Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Group and Summit Materials 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 Summit Materials are associated (or correlated) with Intelligent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Group has no effect on the direction of Summit Materials i.e., Summit Materials and Intelligent Group go up and down completely randomly.

Pair Corralation between Summit Materials and Intelligent Group

Considering the 90-day investment horizon Summit Materials is expected to generate 0.06 times more return on investment than Intelligent Group. However, Summit Materials is 17.42 times less risky than Intelligent Group. It trades about 0.29 of its potential returns per unit of risk. Intelligent Group Limited is currently generating about -0.06 per unit of risk. If you would invest  5,059  in Summit Materials on December 21, 2024 and sell it today you would earn a total of  190.00  from holding Summit Materials or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	55.93%
Values	Daily Returns

Summit Materials  vs.  Intelligent Group Limited

Summit Materials

Risk-Adjusted Performance

Solid

Over the last 90 days Summit Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Summit Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Intelligent Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intelligent Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Pair Trading with Summit Materials and Intelligent Group

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

The idea behind Summit Materials and Intelligent Group Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.