Correlation Between Chesapeake Granite and SK Growth

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

Diversification Opportunities for Chesapeake Granite and SK Growth

-0.06

Correlation Coefficient

Chesapeake Granite  SK Growth

Good diversification

The 3 months correlation between Chesapeake and SKGRU is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities 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 SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and SK Growth go up and down completely randomly.

Pair Corralation between Chesapeake Granite and SK Growth

Given the investment horizon of 90 days Chesapeake Granite is expected to generate 1355.28 times less return on investment than SK Growth. But when comparing it to its historical volatility, Chesapeake Granite Wash is 128.98 times less risky than SK Growth. It trades about 0.02 of its potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,034  in SK Growth Opportunities on October 6, 2024 and sell it today you would earn a total of  133.00  from holding SK Growth Opportunities or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.74%
Values	Daily Returns

Chesapeake Granite Wash  vs.  SK Growth Opportunities

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.

SK Growth Opportunities

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days SK Growth Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SK Growth unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Granite and SK Growth

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

The idea behind Chesapeake Granite Wash and SK Growth Opportunities 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.