Correlation Between Summit Materials and CHKEZ Old

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

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

Diversification Opportunities for Summit Materials and CHKEZ Old

-0.58

Correlation Coefficient

Summit Materials  CHKEZ Old

Excellent diversification

The 3 months correlation between Summit and CHKEZ is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and CHKEZ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHKEZ Old and Summit Materials 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 Summit Materials are associated (or correlated) with CHKEZ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHKEZ Old has no effect on the direction of Summit Materials i.e., Summit Materials and CHKEZ Old go up and down completely randomly.

Pair Corralation between Summit Materials and CHKEZ Old

If you would invest  5,064  in Summit Materials on October 25, 2024 and sell it today you would earn a total of  155.00  from holding Summit Materials or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Summit Materials  vs.  CHKEZ Old

Summit Materials

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

CHKEZ Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Summit Materials and CHKEZ Old

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

The idea behind Summit Materials and CHKEZ Old 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.