Correlation Between Global Ship and Chesapeake Utilities

Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Ship Lease and Chesapeake Utilities, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Chesapeake Utilities.

Diversification Opportunities for Global Ship and Chesapeake Utilities

-0.03

Correlation Coefficient

Global Ship  Chesapeake Utilities

Good diversification

The 3 months correlation between Global and Chesapeake is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between Global Ship and Chesapeake Utilities

Assuming the 90 days horizon Global Ship Lease is expected to generate 1.47 times more return on investment than Chesapeake Utilities. However, Global Ship is 1.47 times more volatile than Chesapeake Utilities. It trades about 0.06 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.04 per unit of risk. If you would invest  2,002  in Global Ship Lease on December 22, 2024 and sell it today you would earn a total of  116.00  from holding Global Ship Lease or generate 5.79% return on investment over 90 days.

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

Global Ship Lease  vs.  Chesapeake Utilities

Global Ship Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Chesapeake Utilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chesapeake Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Ship and Chesapeake Utilities

The main advantage of trading using opposite Global Ship and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.

The idea behind Global Ship Lease and Chesapeake Utilities 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.