Correlation Between CHC Resources and CTCI Corp
Can any of the company-specific risk be diversified away by investing in both CHC Resources and CTCI Corp 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 CHC Resources and CTCI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Resources Corp and CTCI Corp, you can compare the effects of market volatilities on CHC Resources and CTCI Corp 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 CHC Resources with a short position of CTCI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Resources and CTCI Corp.
Diversification Opportunities for CHC Resources and CTCI Corp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHC and CTCI is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CHC Resources Corp and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp and CHC Resources 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 CHC Resources Corp are associated (or correlated) with CTCI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTCI Corp has no effect on the direction of CHC Resources i.e., CHC Resources and CTCI Corp go up and down completely randomly.
Pair Corralation between CHC Resources and CTCI Corp
Assuming the 90 days trading horizon CHC Resources Corp is expected to generate 0.64 times more return on investment than CTCI Corp. However, CHC Resources Corp is 1.56 times less risky than CTCI Corp. It trades about -0.13 of its potential returns per unit of risk. CTCI Corp is currently generating about -0.36 per unit of risk. If you would invest 6,770 in CHC Resources Corp on September 1, 2024 and sell it today you would lose (120.00) from holding CHC Resources Corp or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Resources Corp vs. CTCI Corp
Performance |
| Timeline |
| CHC Resources Corp |
| CTCI Corp |
CHC Resources and CTCI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Resources and CTCI Corp
The main advantage of trading using opposite CHC Resources and CTCI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Resources position performs unexpectedly, CTCI Corp 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 CTCI Corp will offset losses from the drop in CTCI Corp's long position.| CHC Resources vs. China Steel Chemical | CHC Resources vs. Taiwan Secom Co | CHC Resources vs. Nak Sealing Technologies | CHC Resources vs. Sinyi Realty |
| CTCI Corp vs. Taiwan Secom Co | CTCI Corp vs. Pou Chen Corp | CTCI Corp vs. Formosa Petrochemical Corp | CTCI Corp vs. Cheng Shin Rubber |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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