There is no correlation between the unsystematic risk of two companies from different industries.
Stock correlation describes the relationship that exists between two stocks and their respective price movements. It can also refer to the relationship between stocks and other asset classes such as bonds and real estate.
To find the correlation between two stocks, start by finding the average price of each. Select a time period, sum the daily prices of each stock for that period, and divide by the number of days in that period. That's the average price. Next, calculate the daily variance of each stock.
This can be thought of as a simple question. What does Y tend to do as X increases? In general, there is a positive relationship if Y tends to increase with X. If Y decreases while X increases, it is a negative relationship. Correlation is defined numerically by the correlation coefficient.
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