Correlation Between China Resources and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both China Resources 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 China Resources and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Gas and Chesapeake Utilities, you can compare the effects of market volatilities on China Resources 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 China Resources with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Chesapeake Utilities.
Diversification Opportunities for China Resources and Chesapeake Utilities
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Chesapeake is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Gas and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and China Resources 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 China Resources Gas 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 China Resources i.e., China Resources and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between China Resources and Chesapeake Utilities
Assuming the 90 days trading horizon China Resources Gas is expected to generate 2.7 times more return on investment than Chesapeake Utilities. However, China Resources is 2.7 times more volatile than Chesapeake Utilities. It trades about 0.07 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.28 per unit of risk. If you would invest 352.00 in China Resources Gas on September 22, 2024 and sell it today you would earn a total of 14.00 from holding China Resources Gas or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Gas vs. Chesapeake Utilities
Performance |
| Timeline |
| China Resources Gas |
| Chesapeake Utilities |
China Resources and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Chesapeake Utilities
The main advantage of trading using opposite China Resources and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources 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.| China Resources vs. CenterPoint Energy | China Resources vs. Snam SpA | China Resources vs. APA Group | China Resources vs. Tokyo Gas CoLtd |
| Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. China Resources Gas | Chesapeake Utilities vs. APA Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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