Correlation Between Intertek Group and FirstGroup PLC

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

By analyzing existing cross correlation between Intertek Group Plc and FirstGroup PLC ADR, you can compare the effects of market volatilities on Intertek Group and FirstGroup 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 Intertek Group with a short position of FirstGroup PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intertek Group and FirstGroup PLC.

Diversification Opportunities for Intertek Group and FirstGroup PLC

0.79

Correlation Coefficient

Intertek Group  FirstGroup PLC

Poor diversification

The 3 months correlation between Intertek and FirstGroup is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Intertek Group Plc and FirstGroup PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup PLC ADR and Intertek Group 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 Intertek Group Plc are associated (or correlated) with FirstGroup PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup PLC ADR has no effect on the direction of Intertek Group i.e., Intertek Group and FirstGroup PLC go up and down completely randomly.

Pair Corralation between Intertek Group and FirstGroup PLC

Assuming the 90 days horizon Intertek Group is expected to generate 3.67 times less return on investment than FirstGroup PLC. But when comparing it to its historical volatility, Intertek Group Plc is 3.16 times less risky than FirstGroup PLC. It trades about 0.17 of its potential returns per unit of risk. FirstGroup PLC ADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  223.00  in FirstGroup PLC ADR on April 29, 2025 and sell it today you would earn a total of  102.00  from holding FirstGroup PLC ADR or generate 45.74% return on investment over 90 days.

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

Intertek Group Plc  vs.  FirstGroup PLC ADR

Intertek Group Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intertek Group Plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intertek Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

FirstGroup PLC ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstGroup PLC ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, FirstGroup PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intertek Group and FirstGroup PLC

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

The idea behind Intertek Group Plc and FirstGroup PLC ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.