Correlation Between Stabilis Solutions and Chevron Corp

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

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

Diversification Opportunities for Stabilis Solutions and Chevron Corp

0.06

Correlation Coefficient

Stabilis Solutions  Chevron Corp

Significant diversification

The 3 months correlation between Stabilis and Chevron is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Stabilis Solutions and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Stabilis 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 Stabilis Solutions are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Stabilis Solutions i.e., Stabilis Solutions and Chevron Corp go up and down completely randomly.

Pair Corralation between Stabilis Solutions and Chevron Corp

Given the investment horizon of 90 days Stabilis Solutions is expected to generate 3.75 times more return on investment than Chevron Corp. However, Stabilis Solutions is 3.75 times more volatile than Chevron Corp. It trades about 0.13 of its potential returns per unit of risk. Chevron Corp is currently generating about -0.01 per unit of risk. If you would invest  508.00  in Stabilis Solutions on November 28, 2024 and sell it today you would earn a total of  184.00  from holding Stabilis Solutions or generate 36.22% return on investment over 90 days.

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

Stabilis Solutions  vs.  Chevron Corp

Stabilis Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stabilis Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Stabilis Solutions reported solid returns over the last few months and may actually be approaching a breakup point.

Chevron Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Stabilis Solutions and Chevron Corp

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

The idea behind Stabilis Solutions and Chevron Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.