Correlation Between Chart Industries and BLACK

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

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

Diversification Opportunities for Chart Industries and BLACK

-0.25

Correlation Coefficient

Chart Industries  BLACK

Very good diversification

The 3 months correlation between Chart and BLACK is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of Chart Industries i.e., Chart Industries and BLACK go up and down completely randomly.

Pair Corralation between Chart Industries and BLACK

Given the investment horizon of 90 days Chart Industries is expected to generate 5.39 times more return on investment than BLACK. However, Chart Industries is 5.39 times more volatile than BLACK HILLS P. It trades about 0.32 of its potential returns per unit of risk. BLACK HILLS P is currently generating about -0.12 per unit of risk. If you would invest  11,405  in Chart Industries on September 3, 2024 and sell it today you would earn a total of  7,920  from holding Chart Industries or generate 69.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.81%
Values	Daily Returns

Chart Industries  vs.  BLACK HILLS P

Chart Industries

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chart Industries and BLACK

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

The idea behind Chart Industries and BLACK HILLS P 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.