Correlation Between Chia and Hennessy Equity

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

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

Diversification Opportunities for Chia and Hennessy Equity

-0.29

Correlation Coefficient

Chia  Hennessy Equity

Very good diversification

The 3 months correlation between Chia and Hennessy is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Hennessy Equity And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Equity And 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 Hennessy Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Equity And has no effect on the direction of Chia i.e., Chia and Hennessy Equity go up and down completely randomly.

Pair Corralation between Chia and Hennessy Equity

Assuming the 90 days trading horizon Chia is expected to generate 6.43 times more return on investment than Hennessy Equity. However, Chia is 6.43 times more volatile than Hennessy Equity And. It trades about 0.09 of its potential returns per unit of risk. Hennessy Equity And is currently generating about -0.11 per unit of risk. If you would invest  1,621  in Chia on October 10, 2024 and sell it today you would earn a total of  588.00  from holding Chia or generate 36.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Chia  vs.  Hennessy Equity And

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.

Hennessy Equity And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Equity And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Chia and Hennessy Equity

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

The idea behind Chia and Hennessy Equity And 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 Stocks Directory module to find actively traded stocks across global markets.