Correlation Between ANGLO ASIAN and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both ANGLO ASIAN 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 ANGLO ASIAN and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANGLO ASIAN MINING and Chesapeake Utilities, you can compare the effects of market volatilities on ANGLO ASIAN 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 ANGLO ASIAN with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO ASIAN and Chesapeake Utilities.
Diversification Opportunities for ANGLO ASIAN and Chesapeake Utilities
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ANGLO and Chesapeake is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO ASIAN MINING and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and ANGLO ASIAN 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 ANGLO ASIAN MINING 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 ANGLO ASIAN i.e., ANGLO ASIAN and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between ANGLO ASIAN and Chesapeake Utilities
Assuming the 90 days trading horizon ANGLO ASIAN MINING is expected to generate 1.7 times more return on investment than Chesapeake Utilities. However, ANGLO ASIAN is 1.7 times more volatile than Chesapeake Utilities. It trades about 0.1 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.01 per unit of risk. If you would invest 124.00 in ANGLO ASIAN MINING on November 4, 2024 and sell it today you would earn a total of 6.00 from holding ANGLO ASIAN MINING or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ANGLO ASIAN MINING vs. Chesapeake Utilities
Performance |
| Timeline |
| ANGLO ASIAN MINING |
| Chesapeake Utilities |
ANGLO ASIAN and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANGLO ASIAN and Chesapeake Utilities
The main advantage of trading using opposite ANGLO ASIAN and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANGLO ASIAN 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.| ANGLO ASIAN vs. United Natural Foods | ANGLO ASIAN vs. PROSIEBENSAT1 MEDIADR4 | ANGLO ASIAN vs. NH Foods | ANGLO ASIAN vs. Hollywood Bowl Group |
| Chesapeake Utilities vs. Alliance Data Systems | Chesapeake Utilities vs. TAL Education Group | Chesapeake Utilities vs. Datadog | Chesapeake Utilities vs. Perdoceo Education |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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