Correlation Between Chesapeake Granite and Zeon

Can any of the company-specific risk be diversified away by investing in both Chesapeake Granite and Zeon 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 Zeon 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 Zeon Corporation, you can compare the effects of market volatilities on Chesapeake Granite and Zeon 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 Zeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Granite and Zeon.

Diversification Opportunities for Chesapeake Granite and Zeon

0.42

Correlation Coefficient

Chesapeake Granite  Zeon

Very weak diversification

The 3 months correlation between Chesapeake and Zeon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and Zeon Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeon 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 Zeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeon has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and Zeon go up and down completely randomly.

Pair Corralation between Chesapeake Granite and Zeon

Given the investment horizon of 90 days Chesapeake Granite Wash is expected to generate 0.61 times more return on investment than Zeon. However, Chesapeake Granite Wash is 1.63 times less risky than Zeon. It trades about 0.05 of its potential returns per unit of risk. Zeon Corporation is currently generating about 0.01 per unit of risk. If you would invest  112.00  in Chesapeake Granite Wash on October 5, 2024 and sell it today you would earn a total of  6.00  from holding Chesapeake Granite Wash or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	19.83%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Zeon Corp.

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.

Zeon

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zeon Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Zeon 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 Granite and Zeon

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

The idea behind Chesapeake Granite Wash and Zeon Corporation 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..