Correlation Between Chesapeake Utilities and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and RCM TECHNOLOGIES, you can compare the effects of market volatilities on Chesapeake Utilities and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and RCM TECHNOLOGIES.
Diversification Opportunities for Chesapeake Utilities and RCM TECHNOLOGIES
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and RCM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and RCM TECHNOLOGIES
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.53 times more return on investment than RCM TECHNOLOGIES. However, Chesapeake Utilities is 1.9 times less risky than RCM TECHNOLOGIES. It trades about 0.27 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.13 per unit of risk. If you would invest 11,100 in Chesapeake Utilities on August 30, 2024 and sell it today you would earn a total of 1,300 from holding Chesapeake Utilities or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| Chesapeake Utilities |
| RCM TECHNOLOGIES |
Chesapeake Utilities and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and RCM TECHNOLOGIES
The main advantage of trading using opposite Chesapeake Utilities and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.| Chesapeake Utilities vs. Caseys General Stores | Chesapeake Utilities vs. MARKET VECTR RETAIL | Chesapeake Utilities vs. Fast Retailing Co | Chesapeake Utilities vs. SINGAPORE AIRLINES |
| RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Apple Inc | RCM TECHNOLOGIES vs. Superior Plus Corp | RCM TECHNOLOGIES vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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