Correlation Between Chesapeake Energy and Mason Graphite

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

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

Diversification Opportunities for Chesapeake Energy and Mason Graphite

-0.81

Correlation Coefficient

Chesapeake Energy  Mason Graphite

Pay attention - limited upside

The 3 months correlation between Chesapeake and Mason is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite and Chesapeake 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 Chesapeake Energy are associated (or correlated) with Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Mason Graphite go up and down completely randomly.

Pair Corralation between Chesapeake Energy and Mason Graphite

Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Mason Graphite. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 5.81 times less risky than Mason Graphite. The stock trades about -0.21 of its potential returns per unit of risk. The Mason Graphite is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  9.14  in Mason Graphite on February 3, 2024 and sell it today you would lose (0.35) from holding Mason Graphite or give up 3.83% of portfolio value over 90 days.

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

Chesapeake Energy  vs.  Mason Graphite

Chesapeake Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Chesapeake Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Chesapeake Energy and Mason Graphite

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

The idea behind Chesapeake Energy and Mason Graphite 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.