Correlation Between P10 and Chimera Investment

Can any of the company-specific risk be diversified away by investing in both P10 and Chimera Investment 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 P10 and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P10 Inc and Chimera Investment, you can compare the effects of market volatilities on P10 and Chimera Investment 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 P10 with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of P10 and Chimera Investment.

Diversification Opportunities for P10 and Chimera Investment

0.7

Correlation Coefficient

P10  Chimera Investment

Poor diversification

The 3 months correlation between P10 and Chimera is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding P10 Inc and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and P10 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 P10 Inc are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of P10 i.e., P10 and Chimera Investment go up and down completely randomly.

Pair Corralation between P10 and Chimera Investment

Allowing for the 90-day total investment horizon P10 Inc is expected to generate 1.26 times more return on investment than Chimera Investment. However, P10 is 1.26 times more volatile than Chimera Investment. It trades about -0.01 of its potential returns per unit of risk. Chimera Investment is currently generating about -0.03 per unit of risk. If you would invest  1,257  in P10 Inc on December 27, 2024 and sell it today you would lose (31.00) from holding P10 Inc or give up 2.47% of portfolio value over 90 days.

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

P10 Inc  vs.  Chimera Investment

P10 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days P10 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, P10 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Chimera Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Chimera Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with P10 and Chimera Investment

The main advantage of trading using opposite P10 and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P10 position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.

The idea behind P10 Inc and Chimera Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.