Correlation Between Brooge Energy and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Brooge Energy and Chesapeake Energy 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 Brooge Energy and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brooge Energy Limited and Chesapeake Energy, you can compare the effects of market volatilities on Brooge Energy and Chesapeake Energy 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 Brooge Energy with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brooge Energy and Chesapeake Energy.
Diversification Opportunities for Brooge Energy and Chesapeake Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brooge and Chesapeake is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Energy Limited and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and Brooge Energy 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 Brooge Energy Limited are associated (or correlated) with Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of Brooge Energy i.e., Brooge Energy and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Brooge Energy and Chesapeake Energy
Assuming the 90 days horizon Brooge Energy Limited is expected to generate 54.9 times more return on investment than Chesapeake Energy. However, Brooge Energy is 54.9 times more volatile than Chesapeake Energy. It trades about 0.13 of its potential returns per unit of risk. Chesapeake Energy is currently generating about -0.01 per unit of risk. If you would invest 22.00 in Brooge Energy Limited on August 30, 2024 and sell it today you would lose (21.89) from holding Brooge Energy Limited or give up 99.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.31% |
| Values | Daily Returns |
Brooge Energy Limited vs. Chesapeake Energy
Performance |
| Timeline |
| Brooge Energy Limited |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Brooge Energy and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brooge Energy and Chesapeake Energy
The main advantage of trading using opposite Brooge Energy and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brooge Energy position performs unexpectedly, Chesapeake Energy 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 Energy will offset losses from the drop in Chesapeake Energy's long position.The idea behind Brooge Energy Limited and Chesapeake Energy 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.| Chesapeake Energy vs. Lindblad Expeditions Holdings | Chesapeake Energy vs. KVH Industries | Chesapeake Energy vs. Skillful Craftsman Education | Chesapeake Energy vs. Old Dominion Freight |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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