Correlation Between China BlueChemical and Caseys General

Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Caseys General 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 China BlueChemical and Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China BlueChemical and Caseys General Stores, you can compare the effects of market volatilities on China BlueChemical and Caseys General 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 China BlueChemical with a short position of Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Caseys General.

Diversification Opportunities for China BlueChemical and Caseys General

0.08

Correlation Coefficient

China BlueChemical  Caseys General

Significant diversification

The 3 months correlation between China and Caseys is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores and China BlueChemical 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 China BlueChemical are associated (or correlated) with Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of China BlueChemical i.e., China BlueChemical and Caseys General go up and down completely randomly.

Pair Corralation between China BlueChemical and Caseys General

Assuming the 90 days horizon China BlueChemical is expected to generate 2.16 times more return on investment than Caseys General. However, China BlueChemical is 2.16 times more volatile than Caseys General Stores. It trades about 0.05 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.06 per unit of risk. If you would invest  25.00  in China BlueChemical on October 22, 2024 and sell it today you would earn a total of  2.00  from holding China BlueChemical or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China BlueChemical  vs.  Caseys General Stores

China BlueChemical

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China BlueChemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, China BlueChemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Caseys General Stores

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caseys General is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China BlueChemical and Caseys General

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

The idea behind China BlueChemical and Caseys General Stores 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.