Correlation Between BLZ and CHP

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

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

Diversification Opportunities for BLZ and CHP

0.45

Correlation Coefficient

BLZ  CHP

Very weak diversification

The 3 months correlation between BLZ and CHP is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and CHP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHP and BLZ 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 BLZ are associated (or correlated) with CHP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHP has no effect on the direction of BLZ i.e., BLZ and CHP go up and down completely randomly.

Pair Corralation between BLZ and CHP

Assuming the 90 days trading horizon BLZ is expected to generate 1.19 times less return on investment than CHP. But when comparing it to its historical volatility, BLZ is 1.35 times less risky than CHP. It trades about 0.25 of its potential returns per unit of risk. CHP is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.00  in CHP on February 7, 2025 and sell it today you would earn a total of  0.00  from holding CHP or generate 29.41% return on investment over 90 days.

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

BLZ  vs.  CHP

BLZ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BLZ are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BLZ exhibited solid returns over the last few months and may actually be approaching a breakup point.

CHP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for CHP shareholders.

Pair Trading with BLZ and CHP

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

The idea behind BLZ and CHP 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.