Correlation Between FIH MOBILE and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both FIH MOBILE 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 FIH MOBILE and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIH MOBILE and Chesapeake Utilities, you can compare the effects of market volatilities on FIH MOBILE 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 FIH MOBILE with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIH MOBILE and Chesapeake Utilities.
Diversification Opportunities for FIH MOBILE and Chesapeake Utilities
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FIH and Chesapeake is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding FIH MOBILE and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and FIH MOBILE 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 FIH MOBILE 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 FIH MOBILE i.e., FIH MOBILE and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between FIH MOBILE and Chesapeake Utilities
Assuming the 90 days trading horizon FIH MOBILE is expected to generate 2.06 times more return on investment than Chesapeake Utilities. However, FIH MOBILE is 2.06 times more volatile than Chesapeake Utilities. It trades about 0.25 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.23 per unit of risk. If you would invest 10.00 in FIH MOBILE on October 22, 2024 and sell it today you would earn a total of 1.00 from holding FIH MOBILE or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIH MOBILE vs. Chesapeake Utilities
Performance |
| Timeline |
| FIH MOBILE |
| Chesapeake Utilities |
FIH MOBILE and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIH MOBILE and Chesapeake Utilities
The main advantage of trading using opposite FIH MOBILE and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIH MOBILE 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.| FIH MOBILE vs. Mitsubishi Materials | FIH MOBILE vs. Materialise NV | FIH MOBILE vs. Rayonier Advanced Materials | FIH MOBILE vs. AGF Management Limited |
| Chesapeake Utilities vs. INSURANCE AUST GRP | Chesapeake Utilities vs. QBE Insurance Group | Chesapeake Utilities vs. PRECISION DRILLING P | Chesapeake Utilities vs. FIH MOBILE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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