Correlation Between Chesapeake Energy and Adex Mining
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Adex Mining 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 Energy and Adex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Adex Mining, you can compare the effects of market volatilities on Chesapeake Energy and Adex Mining 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 Energy with a short position of Adex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Adex Mining.
Diversification Opportunities for Chesapeake Energy and Adex Mining
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Adex is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Adex Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adex Mining and Chesapeake 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 Chesapeake Energy are associated (or correlated) with Adex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adex Mining has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Adex Mining go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Adex Mining
If you would invest 0.20 in Adex Mining on August 24, 2024 and sell it today you would earn a total of 0.79 from holding Adex Mining or generate 395.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Chesapeake Energy vs. Adex Mining
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
| Adex Mining |
Chesapeake Energy and Adex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Adex Mining
The main advantage of trading using opposite Chesapeake Energy and Adex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Adex Mining 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 Adex Mining will offset losses from the drop in Adex Mining's long position.The idea behind Chesapeake Energy and Adex Mining 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.| Adex Mining vs. Huntsman Exploration | Adex Mining vs. Aurelia Metals Limited | Adex Mining vs. Adriatic Metals PLC | Adex Mining vs. American Helium |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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