Correlation Between ENN Energy and Chesapeake Utilities

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

By analyzing existing cross correlation between ENN Energy Holdings and Chesapeake Utilities, you can compare the effects of market volatilities on ENN Energy and Chesapeake Utilities 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 ENN Energy with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and Chesapeake Utilities.

Diversification Opportunities for ENN Energy and Chesapeake Utilities

-0.37

Correlation Coefficient

ENN Energy  Chesapeake Utilities

Very good diversification

The 3 months correlation between ENN and Chesapeake is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and ENN Energy 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 ENN Energy Holdings are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of ENN Energy i.e., ENN Energy and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between ENN Energy and Chesapeake Utilities

Assuming the 90 days trading horizon ENN Energy Holdings is expected to generate 1.9 times more return on investment than Chesapeake Utilities. However, ENN Energy is 1.9 times more volatile than Chesapeake Utilities. It trades about 0.06 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.03 per unit of risk. If you would invest  690.00  in ENN Energy Holdings on December 30, 2024 and sell it today you would earn a total of  60.00  from holding ENN Energy Holdings or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ENN Energy Holdings  vs.  Chesapeake Utilities

ENN Energy Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, ENN Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Chesapeake Utilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chesapeake Utilities is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ENN Energy and Chesapeake Utilities

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

The idea behind ENN Energy Holdings and Chesapeake Utilities 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.