Correlation Between Chart Industries and Power Solutions

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

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

Diversification Opportunities for Chart Industries and Power Solutions

-0.41

Correlation Coefficient

Chart Industries  Power Solutions

Very good diversification

The 3 months correlation between Chart and Power is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Power Solutions International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solutions Inte and Chart Industries 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 Chart Industries are associated (or correlated) with Power Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solutions Inte has no effect on the direction of Chart Industries i.e., Chart Industries and Power Solutions go up and down completely randomly.

Pair Corralation between Chart Industries and Power Solutions

If you would invest  14,243  in Chart Industries on September 30, 2024 and sell it today you would earn a total of  5,047  from holding Chart Industries or generate 35.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

Chart Industries  vs.  Power Solutions International

Chart Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Power Solutions Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Power Solutions is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chart Industries and Power Solutions

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

The idea behind Chart Industries and Power Solutions International 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.