Correlation Between Chase and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Chase and Koppers Holdings 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 Chase and Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chase and Koppers Holdings, you can compare the effects of market volatilities on Chase and Koppers Holdings 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 Chase with a short position of Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chase and Koppers Holdings.
Diversification Opportunities for Chase and Koppers Holdings
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chase and Koppers is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chase and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings and Chase 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 Chase are associated (or correlated) with Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Chase i.e., Chase and Koppers Holdings go up and down completely randomly.
Pair Corralation between Chase and Koppers Holdings
Considering the 90-day investment horizon Chase is expected to generate 1.5 times less return on investment than Koppers Holdings. But when comparing it to its historical volatility, Chase is 1.45 times less risky than Koppers Holdings. It trades about 0.03 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,275 in Koppers Holdings on August 31, 2024 and sell it today you would earn a total of 571.00 from holding Koppers Holdings or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Chase vs. Koppers Holdings
Performance |
| Timeline |
| Chase |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Koppers Holdings |
Chase and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chase and Koppers Holdings
The main advantage of trading using opposite Chase and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chase position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.The idea behind Chase and Koppers Holdings 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.| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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