Correlation Between Chia and Oil Refineries

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

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

Diversification Opportunities for Chia and Oil Refineries

-0.83

Correlation Coefficient

Chia  Oil Refineries

Pay attention - limited upside

The 3 months correlation between Chia and Oil is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries 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 Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Chia i.e., Chia and Oil Refineries go up and down completely randomly.

Pair Corralation between Chia and Oil Refineries

Assuming the 90 days trading horizon Chia is expected to under-perform the Oil Refineries. In addition to that, Chia is 3.18 times more volatile than Oil Refineries. It trades about -0.08 of its total potential returns per unit of risk. Oil Refineries is currently generating about 0.12 per unit of volatility. If you would invest  9,030  in Oil Refineries on December 19, 2024 and sell it today you would earn a total of  1,080  from holding Oil Refineries or generate 11.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	79.37%
Values	Daily Returns

Chia  vs.  Oil Refineries

Chia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Chia shareholders.

Oil Refineries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Refineries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Oil Refineries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chia and Oil Refineries

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

The idea behind Chia and Oil Refineries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.