Correlation Between CHRYSALIS INVESTMENTS and Tile Shop

Can any of the company-specific risk be diversified away by investing in both CHRYSALIS INVESTMENTS and Tile Shop 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 CHRYSALIS INVESTMENTS and Tile Shop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHRYSALIS INVESTMENTS LTD and Tile Shop Holdings, you can compare the effects of market volatilities on CHRYSALIS INVESTMENTS and Tile Shop 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 CHRYSALIS INVESTMENTS with a short position of Tile Shop. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHRYSALIS INVESTMENTS and Tile Shop.

Diversification Opportunities for CHRYSALIS INVESTMENTS and Tile Shop

0.52

Correlation Coefficient

CHRYSALIS INVESTMENTS  Tile Shop

Very weak diversification

The 3 months correlation between CHRYSALIS and Tile is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CHRYSALIS INVESTMENTS LTD and Tile Shop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tile Shop Holdings and CHRYSALIS INVESTMENTS 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 CHRYSALIS INVESTMENTS LTD are associated (or correlated) with Tile Shop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tile Shop Holdings has no effect on the direction of CHRYSALIS INVESTMENTS i.e., CHRYSALIS INVESTMENTS and Tile Shop go up and down completely randomly.

Pair Corralation between CHRYSALIS INVESTMENTS and Tile Shop

Assuming the 90 days horizon CHRYSALIS INVESTMENTS LTD is expected to generate 0.78 times more return on investment than Tile Shop. However, CHRYSALIS INVESTMENTS LTD is 1.27 times less risky than Tile Shop. It trades about -0.07 of its potential returns per unit of risk. Tile Shop Holdings is currently generating about -0.07 per unit of risk. If you would invest  121.00  in CHRYSALIS INVESTMENTS LTD on December 22, 2024 and sell it today you would lose (10.00) from holding CHRYSALIS INVESTMENTS LTD or give up 8.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CHRYSALIS INVESTMENTS LTD  vs.  Tile Shop Holdings

CHRYSALIS INVESTMENTS LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHRYSALIS INVESTMENTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tile Shop Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tile Shop Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHRYSALIS INVESTMENTS and Tile Shop

The main advantage of trading using opposite CHRYSALIS INVESTMENTS and Tile Shop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHRYSALIS INVESTMENTS position performs unexpectedly, Tile Shop 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 Tile Shop will offset losses from the drop in Tile Shop's long position.

The idea behind CHRYSALIS INVESTMENTS LTD and Tile Shop Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.