Correlation Between Chesapeake Utilities and ADYEN NV

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

By analyzing existing cross correlation between Chesapeake Utilities and ADYEN NV UNSPADR001, you can compare the effects of market volatilities on Chesapeake Utilities and ADYEN NV 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 Chesapeake Utilities with a short position of ADYEN NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and ADYEN NV.

Diversification Opportunities for Chesapeake Utilities and ADYEN NV

-0.14

Correlation Coefficient

Chesapeake Utilities  ADYEN NV

Good diversification

The 3 months correlation between Chesapeake and ADYEN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and ADYEN NV UNSPADR001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADYEN NV UNSPADR001 and Chesapeake Utilities 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 Chesapeake Utilities are associated (or correlated) with ADYEN NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADYEN NV UNSPADR001 has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and ADYEN NV go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and ADYEN NV

Assuming the 90 days horizon Chesapeake Utilities is expected to generate 3.77 times less return on investment than ADYEN NV. But when comparing it to its historical volatility, Chesapeake Utilities is 2.72 times less risky than ADYEN NV. It trades about 0.01 of its potential returns per unit of risk. ADYEN NV UNSPADR001 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,390  in ADYEN NV UNSPADR001 on October 4, 2024 and sell it today you would lose (10.00) from holding ADYEN NV UNSPADR001 or give up 0.72% of portfolio value over 90 days.

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

Chesapeake Utilities  vs.  ADYEN NV UNSPADR001

Chesapeake Utilities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 4 (%) 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.

ADYEN NV UNSPADR001

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADYEN NV UNSPADR001 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADYEN NV may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chesapeake Utilities and ADYEN NV

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

The idea behind Chesapeake Utilities and ADYEN NV UNSPADR001 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.