Correlation Between Intertek Group and Johnson Matthey

Can any of the company-specific risk be diversified away by investing in both Intertek Group and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey Plc, you can compare the effects of market volatilities on Intertek Group and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intertek Group and Johnson Matthey.

Diversification Opportunities for Intertek Group and Johnson Matthey

0.53

Correlation Coefficient

Intertek Group  Johnson Matthey

Very weak diversification

The 3 months correlation between Intertek and Johnson is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Intertek Group Plc and Johnson Matthey Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey Plc 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey Plc has no effect on the direction of Intertek Group i.e., Intertek Group and Johnson Matthey go up and down completely randomly.

Pair Corralation between Intertek Group and Johnson Matthey

Assuming the 90 days horizon Intertek Group is expected to generate 13.49 times less return on investment than Johnson Matthey. But when comparing it to its historical volatility, Intertek Group Plc is 2.24 times less risky than Johnson Matthey. It trades about 0.02 of its potential returns per unit of risk. Johnson Matthey Plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,951  in Johnson Matthey Plc on May 10, 2025 and sell it today you would earn a total of  379.00  from holding Johnson Matthey Plc or generate 19.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.33%
Values	Daily Returns

Intertek Group Plc  vs.  Johnson Matthey Plc

Intertek Group Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intertek Group Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Intertek Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johnson Matthey Plc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Matthey Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Johnson Matthey reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intertek Group and Johnson Matthey

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

The idea behind Intertek Group Plc and Johnson Matthey 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.