Correlation Between Chesapeake Granite and Stamper Oil

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

Diversification Opportunities for Chesapeake Granite and Stamper Oil

-0.19

Correlation Coefficient

Chesapeake Granite  Stamper Oil

Good diversification

The 3 months correlation between Chesapeake and Stamper is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper Oil Gas 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 Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and Stamper Oil go up and down completely randomly.

Pair Corralation between Chesapeake Granite and Stamper Oil

Given the investment horizon of 90 days Chesapeake Granite is expected to generate 46.41 times less return on investment than Stamper Oil. But when comparing it to its historical volatility, Chesapeake Granite Wash is 36.48 times less risky than Stamper Oil. It trades about 0.06 of its potential returns per unit of risk. Stamper Oil Gas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Stamper Oil Gas on October 4, 2024 and sell it today you would lose (22.00) from holding Stamper Oil Gas or give up 95.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.56%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Stamper Oil Gas

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.

Stamper Oil Gas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stamper Oil Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Stamper Oil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Granite and Stamper Oil

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

The idea behind Chesapeake Granite Wash and Stamper Oil Gas 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.