Correlation Between Chailease Holding and ESUN Financial

Can any of the company-specific risk be diversified away by investing in both Chailease Holding and ESUN Financial 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 Chailease Holding and ESUN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chailease Holding Co and ESUN Financial Holding, you can compare the effects of market volatilities on Chailease Holding and ESUN Financial 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 Chailease Holding with a short position of ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chailease Holding and ESUN Financial.

Diversification Opportunities for Chailease Holding and ESUN Financial

0.85

Correlation Coefficient

Chailease Holding  ESUN Financial

Very poor diversification

The 3 months correlation between Chailease and ESUN is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chailease Holding Co and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding and Chailease Holding 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 Chailease Holding Co are associated (or correlated) with ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Chailease Holding i.e., Chailease Holding and ESUN Financial go up and down completely randomly.

Pair Corralation between Chailease Holding and ESUN Financial

Assuming the 90 days trading horizon Chailease Holding is expected to generate 1.44 times less return on investment than ESUN Financial. In addition to that, Chailease Holding is 2.11 times more volatile than ESUN Financial Holding. It trades about 0.06 of its total potential returns per unit of risk. ESUN Financial Holding is currently generating about 0.19 per unit of volatility. If you would invest  2,710  in ESUN Financial Holding on December 30, 2024 and sell it today you would earn a total of  255.00  from holding ESUN Financial Holding or generate 9.41% return on investment over 90 days.

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

Chailease Holding Co  vs.  ESUN Financial Holding

Chailease Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chailease Holding Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chailease Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ESUN Financial Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESUN Financial Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ESUN Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chailease Holding and ESUN Financial

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

The idea behind Chailease Holding Co and ESUN Financial Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.