Correlation Between Chesapeake Utilities and ORIX JREIT

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

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

Diversification Opportunities for Chesapeake Utilities and ORIX JREIT

0.37

Correlation Coefficient

Chesapeake Utilities  ORIX JREIT

Weak diversification

The 3 months correlation between Chesapeake and ORIX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and ORIX JREIT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX JREIT INC 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 ORIX JREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX JREIT INC has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and ORIX JREIT go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and ORIX JREIT

Assuming the 90 days horizon Chesapeake Utilities is expected to generate 10.61 times less return on investment than ORIX JREIT. In addition to that, Chesapeake Utilities is 1.08 times more volatile than ORIX JREIT INC. It trades about 0.01 of its total potential returns per unit of risk. ORIX JREIT INC is currently generating about 0.15 per unit of volatility. If you would invest  94,372  in ORIX JREIT INC on December 21, 2024 and sell it today you would earn a total of  10,628  from holding ORIX JREIT INC or generate 11.26% return on investment over 90 days.

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

Chesapeake Utilities  vs.  ORIX JREIT INC

Chesapeake Utilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 1 (%) 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.

ORIX JREIT INC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ORIX JREIT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chesapeake Utilities and ORIX JREIT

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

The idea behind Chesapeake Utilities and ORIX JREIT INC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.