Correlation Between Chesapeake Granite and Sparindex INDEX

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

Diversification Opportunities for Chesapeake Granite and Sparindex INDEX

-0.56

Correlation Coefficient

Chesapeake Granite  Sparindex INDEX

Excellent diversification

The 3 months correlation between Chesapeake and Sparindex is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and Sparindex INDEX Bredygtige in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparindex INDEX Bred 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 Sparindex INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparindex INDEX Bred has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and Sparindex INDEX go up and down completely randomly.

Pair Corralation between Chesapeake Granite and Sparindex INDEX

Given the investment horizon of 90 days Chesapeake Granite is expected to generate 30.0 times less return on investment than Sparindex INDEX. But when comparing it to its historical volatility, Chesapeake Granite Wash is 1.29 times less risky than Sparindex INDEX. It trades about 0.0 of its potential returns per unit of risk. Sparindex INDEX Bredygtige is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,075  in Sparindex INDEX Bredygtige on October 22, 2024 and sell it today you would earn a total of  1,575  from holding Sparindex INDEX Bredygtige or generate 14.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	6.14%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Sparindex INDEX Bredygtige

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.

Sparindex INDEX Bred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparindex INDEX Bredygtige has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Sparindex INDEX is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chesapeake Granite and Sparindex INDEX

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

The idea behind Chesapeake Granite Wash and Sparindex INDEX Bredygtige 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.