Correlation Between Chesapeake Utilities and SANOK RUBBER

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

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

Diversification Opportunities for Chesapeake Utilities and SANOK RUBBER

-0.2

Correlation Coefficient

Chesapeake Utilities  SANOK RUBBER

Good diversification

The 3 months correlation between Chesapeake and SANOK is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and Chesapeake Utilities 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 Chesapeake Utilities are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and SANOK RUBBER go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and SANOK RUBBER

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the SANOK RUBBER. In addition to that, Chesapeake Utilities is 1.24 times more volatile than SANOK RUBBER ZY. It trades about -0.43 of its total potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.27 per unit of volatility. If you would invest  434.00  in SANOK RUBBER ZY on September 24, 2024 and sell it today you would earn a total of  21.00  from holding SANOK RUBBER ZY or generate 4.84% return on investment over 90 days.

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

Chesapeake Utilities  vs.  SANOK RUBBER ZY

Chesapeake Utilities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 4 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

SANOK RUBBER ZY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SANOK RUBBER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chesapeake Utilities and SANOK RUBBER

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

The idea behind Chesapeake Utilities and SANOK RUBBER ZY 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.