Correlation Between Chesapeake Utilities and Mitsubishi Gas
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Mitsubishi Gas 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 Chesapeake Utilities and Mitsubishi Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Mitsubishi Gas Chemical, you can compare the effects of market volatilities on Chesapeake Utilities and Mitsubishi Gas 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 Chesapeake Utilities with a short position of Mitsubishi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Mitsubishi Gas.
Diversification Opportunities for Chesapeake Utilities and Mitsubishi Gas
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chesapeake and Mitsubishi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Mitsubishi Gas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Gas Chemical and Chesapeake Utilities 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 Chesapeake Utilities are associated (or correlated) with Mitsubishi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Gas Chemical has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Mitsubishi Gas go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Mitsubishi Gas
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 1.43 times more return on investment than Mitsubishi Gas. However, Chesapeake Utilities is 1.43 times more volatile than Mitsubishi Gas Chemical. It trades about 0.37 of its potential returns per unit of risk. Mitsubishi Gas Chemical is currently generating about 0.41 per unit of risk. If you would invest 10,700 in Chesapeake Utilities on September 3, 2024 and sell it today you would earn a total of 1,600 from holding Chesapeake Utilities or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Mitsubishi Gas Chemical
Performance |
| Timeline |
| Chesapeake Utilities |
| Mitsubishi Gas Chemical |
Chesapeake Utilities and Mitsubishi Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Mitsubishi Gas
The main advantage of trading using opposite Chesapeake Utilities and Mitsubishi Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Mitsubishi Gas 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 Mitsubishi Gas will offset losses from the drop in Mitsubishi Gas' long position.| Chesapeake Utilities vs. ENN Energy Holdings | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings | Chesapeake Utilities vs. Origin Agritech |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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