Correlation Between CHKEZ Old and Financial Strategies

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

By analyzing existing cross correlation between CHKEZ Old and Financial Strategies Acquisition, you can compare the effects of market volatilities on CHKEZ Old and Financial Strategies 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 CHKEZ Old with a short position of Financial Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHKEZ Old and Financial Strategies.

Diversification Opportunities for CHKEZ Old and Financial Strategies

-0.54

Correlation Coefficient

CHKEZ Old  Financial Strategies

Excellent diversification

The 3 months correlation between CHKEZ and Financial is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CHKEZ Old and Financial Strategies Acquisiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Strategies and CHKEZ Old 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 CHKEZ Old are associated (or correlated) with Financial Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Strategies has no effect on the direction of CHKEZ Old i.e., CHKEZ Old and Financial Strategies go up and down completely randomly.

Pair Corralation between CHKEZ Old and Financial Strategies

Assuming the 90 days horizon CHKEZ Old is expected to generate 3.34 times less return on investment than Financial Strategies. In addition to that, CHKEZ Old is 5.77 times more volatile than Financial Strategies Acquisition. It trades about 0.01 of its total potential returns per unit of risk. Financial Strategies Acquisition is currently generating about 0.17 per unit of volatility. If you would invest  1,080  in Financial Strategies Acquisition on October 24, 2024 and sell it today you would earn a total of  10.00  from holding Financial Strategies Acquisition or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.75%
Values	Daily Returns

CHKEZ Old  vs.  Financial Strategies Acquisiti

CHKEZ Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHKEZ Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, CHKEZ Old is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Financial Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financial Strategies Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Financial Strategies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CHKEZ Old and Financial Strategies

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

The idea behind CHKEZ Old and Financial Strategies Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.