Correlation Between Chia and EI Du

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

By analyzing existing cross correlation between Chia and EI du Pont, you can compare the effects of market volatilities on Chia and EI Du 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 Chia with a short position of EI Du. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and EI Du.

Diversification Opportunities for Chia and EI Du

-0.59

Correlation Coefficient

Chia  EI Du

Excellent diversification

The 3 months correlation between Chia and CTA-P-A is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chia and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont and Chia 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 Chia are associated (or correlated) with EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Chia i.e., Chia and EI Du go up and down completely randomly.

Pair Corralation between Chia and EI Du

Assuming the 90 days trading horizon Chia is expected to under-perform the EI Du. In addition to that, Chia is 6.72 times more volatile than EI du Pont. It trades about -0.06 of its total potential returns per unit of risk. EI du Pont is currently generating about -0.11 per unit of volatility. If you would invest  5,610  in EI du Pont on October 24, 2024 and sell it today you would lose (90.00) from holding EI du Pont or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Chia  vs.  EI du Pont

Chia

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chia exhibited solid returns over the last few months and may actually be approaching a breakup point.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chia and EI Du

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

The idea behind Chia and EI du Pont 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.