Correlation Between Chen Full and CHC Resources

Can any of the company-specific risk be diversified away by investing in both Chen Full and CHC Resources 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 Chen Full and CHC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chen Full International and CHC Resources Corp, you can compare the effects of market volatilities on Chen Full and CHC Resources 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 Chen Full with a short position of CHC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chen Full and CHC Resources.

Diversification Opportunities for Chen Full and CHC Resources

0.43

Correlation Coefficient

Chen Full  CHC Resources

Very weak diversification

The 3 months correlation between Chen and CHC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chen Full International and CHC Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Resources Corp and Chen Full 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 Chen Full International are associated (or correlated) with CHC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Resources Corp has no effect on the direction of Chen Full i.e., Chen Full and CHC Resources go up and down completely randomly.

Pair Corralation between Chen Full and CHC Resources

Assuming the 90 days trading horizon Chen Full International is expected to generate 2.48 times more return on investment than CHC Resources. However, Chen Full is 2.48 times more volatile than CHC Resources Corp. It trades about 0.0 of its potential returns per unit of risk. CHC Resources Corp is currently generating about -0.02 per unit of risk. If you would invest  4,500  in Chen Full International on October 23, 2024 and sell it today you would lose (15.00) from holding Chen Full International or give up 0.33% of portfolio value over 90 days.

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

Chen Full International  vs.  CHC Resources Corp

Chen Full International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chen Full International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chen Full is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CHC Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHC Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CHC Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chen Full and CHC Resources

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

The idea behind Chen Full International and CHC Resources Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.