Correlation Between Daido Steel and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Daido Steel and Chesapeake Utilities 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 Daido Steel and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daido Steel Co and Chesapeake Utilities, you can compare the effects of market volatilities on Daido Steel and Chesapeake Utilities 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 Daido Steel with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daido Steel and Chesapeake Utilities.
Diversification Opportunities for Daido Steel and Chesapeake Utilities
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Daido and Chesapeake is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Daido Steel Co and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Daido Steel 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 Daido Steel Co are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Daido Steel i.e., Daido Steel and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Daido Steel and Chesapeake Utilities
Assuming the 90 days horizon Daido Steel is expected to generate 46.49 times less return on investment than Chesapeake Utilities. But when comparing it to its historical volatility, Daido Steel Co is 1.18 times less risky than Chesapeake Utilities. It trades about 0.01 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 11,000 in Chesapeake Utilities on August 31, 2024 and sell it today you would earn a total of 1,400 from holding Chesapeake Utilities or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Daido Steel Co vs. Chesapeake Utilities
Performance |
| Timeline |
| Daido Steel |
| Chesapeake Utilities |
Daido Steel and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daido Steel and Chesapeake Utilities
The main advantage of trading using opposite Daido Steel and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daido Steel position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Daido Steel vs. NH HOTEL GROUP | Daido Steel vs. MOVIE GAMES SA | Daido Steel vs. United Natural Foods | Daido Steel vs. CAL MAINE FOODS |
| Chesapeake Utilities vs. Coeur Mining | Chesapeake Utilities vs. Check Point Software | Chesapeake Utilities vs. PKSHA TECHNOLOGY INC | Chesapeake Utilities vs. Vishay Intertechnology |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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