Correlation Between Chesapeake Utilities and SOGECLAIR

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

By analyzing existing cross correlation between Chesapeake Utilities and SOGECLAIR SA INH, you can compare the effects of market volatilities on Chesapeake Utilities and SOGECLAIR 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 SOGECLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and SOGECLAIR.

Diversification Opportunities for Chesapeake Utilities and SOGECLAIR

-0.01

Correlation Coefficient

Chesapeake Utilities  SOGECLAIR

Good diversification

The 3 months correlation between Chesapeake and SOGECLAIR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH 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 SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and SOGECLAIR go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and SOGECLAIR

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the SOGECLAIR. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 1.82 times less risky than SOGECLAIR. The stock trades about -0.03 of its potential returns per unit of risk. The SOGECLAIR SA INH is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,825  in SOGECLAIR SA INH on September 17, 2024 and sell it today you would earn a total of  0.00  from holding SOGECLAIR SA INH or generate 0.0% return on investment over 90 days.

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

Chesapeake Utilities  vs.  SOGECLAIR SA INH

Chesapeake Utilities

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chesapeake Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGECLAIR SA INH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOGECLAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chesapeake Utilities and SOGECLAIR

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

The idea behind Chesapeake Utilities and SOGECLAIR SA INH 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.