Correlation Between Chia and Crown Energy

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

By analyzing existing cross correlation between Chia and Crown Energy AB, you can compare the effects of market volatilities on Chia and Crown Energy 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 Crown Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Crown Energy.

Diversification Opportunities for Chia and Crown Energy

-0.22

Correlation Coefficient

Chia  Crown Energy

Very good diversification

The 3 months correlation between Chia and Crown is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Crown Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Energy AB 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 Crown Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Energy AB has no effect on the direction of Chia i.e., Chia and Crown Energy go up and down completely randomly.

Pair Corralation between Chia and Crown Energy

Assuming the 90 days trading horizon Chia is expected to generate 0.55 times more return on investment than Crown Energy. However, Chia is 1.82 times less risky than Crown Energy. It trades about 0.1 of its potential returns per unit of risk. Crown Energy AB is currently generating about 0.02 per unit of risk. If you would invest  1,342  in Chia on October 25, 2024 and sell it today you would earn a total of  588.00  from holding Chia or generate 43.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Chia  vs.  Crown Energy AB

Chia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 7 (%) 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.

Crown Energy AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Energy AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Crown Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chia and Crown Energy

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

The idea behind Chia and Crown Energy AB 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.