Correlation Between Chesapeake Utilities and AXA Aedificandi

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

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

Diversification Opportunities for Chesapeake Utilities and AXA Aedificandi

0.0

Correlation Coefficient

Chesapeake Utilities  AXA Aedificandi

Pay attention - limited upside

The 3 months correlation between Chesapeake and AXA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and AXA Aedificandi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA Aedificandi 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 AXA Aedificandi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA Aedificandi has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and AXA Aedificandi go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and AXA Aedificandi

If you would invest  11,341  in Chesapeake Utilities on December 20, 2024 and sell it today you would earn a total of  59.00  from holding Chesapeake Utilities or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Chesapeake Utilities  vs.  AXA Aedificandi

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.

AXA Aedificandi

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXA Aedificandi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, AXA Aedificandi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chesapeake Utilities and AXA Aedificandi

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

The idea behind Chesapeake Utilities and AXA Aedificandi 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.