Correlation Between Ideal Group and Intertech

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

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

Diversification Opportunities for Ideal Group and Intertech

-0.62

Correlation Coefficient

Ideal Group  Intertech

Excellent diversification

The 3 months correlation between Ideal and Intertech is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ideal Group SA and Intertech SA Inter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertech SA Inter and Ideal 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 Ideal Group SA are associated (or correlated) with Intertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertech SA Inter has no effect on the direction of Ideal Group i.e., Ideal Group and Intertech go up and down completely randomly.

Pair Corralation between Ideal Group and Intertech

Assuming the 90 days trading horizon Ideal Group SA is expected to under-perform the Intertech. But the stock apears to be less risky and, when comparing its historical volatility, Ideal Group SA is 1.31 times less risky than Intertech. The stock trades about -0.07 of its potential returns per unit of risk. The Intertech SA Inter is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Intertech SA Inter on May 5, 2025 and sell it today you would earn a total of  23.00  from holding Intertech SA Inter or generate 18.4% return on investment over 90 days.

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

Ideal Group SA  vs.  Intertech SA Inter

Ideal Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ideal Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ideal Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Intertech SA Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intertech SA Inter are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intertech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ideal Group and Intertech

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

The idea behind Ideal Group SA and Intertech SA Inter 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.