Correlation Between CHS and CHS

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

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

Diversification Opportunities for CHS and CHS

0.76

Correlation Coefficient

CHS  CHS

Poor diversification

The 3 months correlation between CHS and CHS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CHS Inc CM and CHS Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc Pref and CHS 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 CHS Inc CM are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc Pref has no effect on the direction of CHS i.e., CHS and CHS go up and down completely randomly.

Pair Corralation between CHS and CHS

Assuming the 90 days horizon CHS Inc CM is expected to generate 0.47 times more return on investment than CHS. However, CHS Inc CM is 2.14 times less risky than CHS. It trades about 0.04 of its potential returns per unit of risk. CHS Inc Pref is currently generating about -0.32 per unit of risk. If you would invest  2,515  in CHS Inc CM on January 31, 2024 and sell it today you would earn a total of  7.00  from holding CHS Inc CM or generate 0.28% return on investment over 90 days.

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

CHS Inc CM  vs.  CHS Inc Pref

CHS Inc CM

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHS Inc CM are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, CHS is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CHS Inc Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHS Inc Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, CHS is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CHS and CHS

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

The idea behind CHS Inc CM and CHS Inc Pref 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.