Correlation Between Ellomay Capital and Chesapeake Utilities

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

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

Diversification Opportunities for Ellomay Capital and Chesapeake Utilities

-0.04

Correlation Coefficient

Ellomay Capital  Chesapeake Utilities

Good diversification

The 3 months correlation between Ellomay and Chesapeake is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ellomay Capital and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Ellomay Capital 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 Ellomay Capital 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 Ellomay Capital i.e., Ellomay Capital and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between Ellomay Capital and Chesapeake Utilities

Given the investment horizon of 90 days Ellomay Capital is expected to generate 2.23 times more return on investment than Chesapeake Utilities. However, Ellomay Capital is 2.23 times more volatile than Chesapeake Utilities. It trades about 0.12 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.11 per unit of risk. If you would invest  1,491  in Ellomay Capital on May 7, 2025 and sell it today you would earn a total of  349.00  from holding Ellomay Capital or generate 23.41% return on investment over 90 days.

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

Ellomay Capital  vs.  Chesapeake Utilities

Ellomay Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ellomay Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Ellomay Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Chesapeake Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chesapeake Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Ellomay Capital and Chesapeake Utilities

The main advantage of trading using opposite Ellomay Capital and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellomay Capital 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 Ellomay Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.