Correlation Between Chart Industries and Graham

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

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

Diversification Opportunities for Chart Industries and Graham

0.6

Correlation Coefficient

Chart Industries  Graham

Poor diversification

The 3 months correlation between Chart and Graham is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Graham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham and Chart Industries 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 Chart Industries are associated (or correlated) with Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham has no effect on the direction of Chart Industries i.e., Chart Industries and Graham go up and down completely randomly.

Pair Corralation between Chart Industries and Graham

Given the investment horizon of 90 days Chart Industries is expected to generate 1.35 times less return on investment than Graham. But when comparing it to its historical volatility, Chart Industries is 1.45 times less risky than Graham. It trades about 0.09 of its potential returns per unit of risk. Graham is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,388  in Graham on March 5, 2024 and sell it today you would earn a total of  317.00  from holding Graham or generate 13.27% return on investment over 90 days.

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

Chart Industries  vs.  Graham

Chart Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Chart Industries may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Graham

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graham are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical indicators, Graham displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chart Industries and Graham

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

The idea behind Chart Industries and Graham 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.