Correlation Between Charah Solutions and Houston Natural

Can any of the company-specific risk be diversified away by investing in both Charah Solutions and Houston Natural 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 Charah Solutions and Houston Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charah Solutions and Houston Natural Resources, you can compare the effects of market volatilities on Charah Solutions and Houston Natural 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 Charah Solutions with a short position of Houston Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charah Solutions and Houston Natural.

Diversification Opportunities for Charah Solutions and Houston Natural

0.0

Correlation Coefficient

Charah Solutions  Houston Natural

Pay attention - limited upside

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

Pair Corralation between Charah Solutions and Houston Natural

If you would invest  1.70  in Houston Natural Resources on December 29, 2024 and sell it today you would lose (0.12) from holding Houston Natural Resources or give up 7.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Charah Solutions  vs.  Houston Natural Resources

Charah Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charah Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Charah Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Houston Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Houston Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Houston Natural is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Charah Solutions and Houston Natural

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

The idea behind Charah Solutions and Houston Natural Resources 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.