Correlation Between Chevron Corp and Adagene
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Adagene 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 Chevron Corp and Adagene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Adagene, you can compare the effects of market volatilities on Chevron Corp and Adagene 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 Chevron Corp with a short position of Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Adagene.
Diversification Opportunities for Chevron Corp and Adagene
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chevron and Adagene is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Chevron Corp 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 Chevron Corp are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Chevron Corp i.e., Chevron Corp and Adagene go up and down completely randomly.
Pair Corralation between Chevron Corp and Adagene
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.22 times more return on investment than Adagene. However, Chevron Corp is 4.63 times less risky than Adagene. It trades about 0.39 of its potential returns per unit of risk. Adagene is currently generating about -0.22 per unit of risk. If you would invest 14,656 in Chevron Corp on August 31, 2024 and sell it today you would earn a total of 1,537 from holding Chevron Corp or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Adagene
Performance |
| Timeline |
| Chevron Corp |
| Adagene |
Chevron Corp and Adagene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Adagene
The main advantage of trading using opposite Chevron Corp and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Adagene 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 Adagene will offset losses from the drop in Adagene's long position.| Chevron Corp vs. RLJ Lodging Trust | Chevron Corp vs. Aquagold International | Chevron Corp vs. Stepstone Group | Chevron Corp vs. Morningstar Unconstrained Allocation |
| Adagene vs. Aerovate Therapeutics | Adagene vs. Acrivon Therapeutics, Common | Adagene vs. Rezolute | Adagene vs. AN2 Therapeutics |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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