Correlation Between ALEFARM BREWING and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and Chesapeake Utilities 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 ALEFARM BREWING and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALEFARM BREWING DK 05 and Chesapeake Utilities, you can compare the effects of market volatilities on ALEFARM BREWING and Chesapeake Utilities 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 ALEFARM BREWING with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and Chesapeake Utilities.
Diversification Opportunities for ALEFARM BREWING and Chesapeake Utilities
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALEFARM and Chesapeake is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between ALEFARM BREWING and Chesapeake Utilities
Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to under-perform the Chesapeake Utilities. In addition to that, ALEFARM BREWING is 3.22 times more volatile than Chesapeake Utilities. It trades about -0.02 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.08 per unit of volatility. If you would invest 11,144 in Chesapeake Utilities on November 7, 2024 and sell it today you would earn a total of 656.00 from holding Chesapeake Utilities or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALEFARM BREWING DK 05 vs. Chesapeake Utilities
Performance |
| Timeline |
| ALEFARM BREWING DK |
| Chesapeake Utilities |
ALEFARM BREWING and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALEFARM BREWING and Chesapeake Utilities
The main advantage of trading using opposite ALEFARM BREWING and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| ALEFARM BREWING vs. PennyMac Mortgage Investment | ALEFARM BREWING vs. New Residential Investment | ALEFARM BREWING vs. SLR Investment Corp | ALEFARM BREWING vs. American Public Education |
| Chesapeake Utilities vs. New Residential Investment | Chesapeake Utilities vs. DIVERSIFIED ROYALTY | Chesapeake Utilities vs. SEI INVESTMENTS | Chesapeake Utilities vs. CHIBA BANK |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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