Correlation Between Chesapeake Granite and Incitec Pivot

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

By analyzing existing cross correlation between Chesapeake Granite Wash and Incitec Pivot Ltd, you can compare the effects of market volatilities on Chesapeake Granite and Incitec Pivot 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 Granite with a short position of Incitec Pivot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Granite and Incitec Pivot.

Diversification Opportunities for Chesapeake Granite and Incitec Pivot

0.0

Correlation Coefficient

Chesapeake Granite  Incitec Pivot

Pay attention - limited upside

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

Pair Corralation between Chesapeake Granite and Incitec Pivot

If you would invest  202.00  in Incitec Pivot Ltd on October 5, 2024 and sell it today you would earn a total of  19.00  from holding Incitec Pivot Ltd or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Incitec Pivot Ltd

Chesapeake Granite Wash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Granite Wash has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Chesapeake Granite is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Incitec Pivot

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incitec Pivot Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Incitec Pivot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Granite and Incitec Pivot

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

The idea behind Chesapeake Granite Wash and Incitec Pivot Ltd 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 Anywhere module to track or share privately all of your investments from the convenience of any device.