Correlation Between KINGBOARD CHEMICAL and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Chesapeake Utilities, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Chesapeake Utilities.
Diversification Opportunities for KINGBOARD CHEMICAL and Chesapeake Utilities
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KINGBOARD and Chesapeake is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Chesapeake Utilities
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.11 times less return on investment than Chesapeake Utilities. In addition to that, KINGBOARD CHEMICAL is 2.55 times more volatile than Chesapeake Utilities. It trades about 0.05 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.13 per unit of volatility. If you would invest 9,981 in Chesapeake Utilities on September 3, 2024 and sell it today you would earn a total of 2,319 from holding Chesapeake Utilities or generate 23.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Chesapeake Utilities
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Chesapeake Utilities |
KINGBOARD CHEMICAL and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Chesapeake Utilities
The main advantage of trading using opposite KINGBOARD CHEMICAL and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
| Chesapeake Utilities vs. ENN Energy Holdings | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings | Chesapeake Utilities vs. Origin Agritech |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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