Correlation Between Chicago Atlantic and Hawaiian Electric

Can any of the company-specific risk be diversified away by investing in both Chicago Atlantic and Hawaiian Electric 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 Chicago Atlantic and Hawaiian Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chicago Atlantic BDC, and Hawaiian Electric, you can compare the effects of market volatilities on Chicago Atlantic and Hawaiian Electric 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 Chicago Atlantic with a short position of Hawaiian Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicago Atlantic and Hawaiian Electric.

Diversification Opportunities for Chicago Atlantic and Hawaiian Electric

-0.53

Correlation Coefficient

Chicago Atlantic  Hawaiian Electric

Excellent diversification

The 3 months correlation between Chicago and Hawaiian is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Atlantic BDC, and Hawaiian Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Electric and Chicago Atlantic 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 Chicago Atlantic BDC, are associated (or correlated) with Hawaiian Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Electric has no effect on the direction of Chicago Atlantic i.e., Chicago Atlantic and Hawaiian Electric go up and down completely randomly.

Pair Corralation between Chicago Atlantic and Hawaiian Electric

Given the investment horizon of 90 days Chicago Atlantic is expected to generate 1.86 times less return on investment than Hawaiian Electric. But when comparing it to its historical volatility, Chicago Atlantic BDC, is 3.16 times less risky than Hawaiian Electric. It trades about 0.06 of its potential returns per unit of risk. Hawaiian Electric is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,380  in Hawaiian Electric on September 23, 2024 and sell it today you would earn a total of  121.00  from holding Hawaiian Electric or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.43%
Values	Daily Returns

Chicago Atlantic BDC,  vs.  Hawaiian Electric

Chicago Atlantic BDC,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Atlantic BDC, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Chicago Atlantic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hawaiian Electric

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawaiian Electric are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Hawaiian Electric is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chicago Atlantic and Hawaiian Electric

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

The idea behind Chicago Atlantic BDC, and Hawaiian Electric 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.