Correlation Between Chesapeake Energy and Oxbridge Acquisition

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

By analyzing existing cross correlation between Chesapeake Energy and Oxbridge Acquisition Equity, you can compare the effects of market volatilities on Chesapeake Energy and Oxbridge Acquisition 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 Oxbridge Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Oxbridge Acquisition.

Diversification Opportunities for Chesapeake Energy and Oxbridge Acquisition

0.76

Correlation Coefficient

Chesapeake Energy  Oxbridge Acquisition

Poor diversification

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

Pair Corralation between Chesapeake Energy and Oxbridge Acquisition

If you would invest  5,684  in Chesapeake Energy on September 16, 2024 and sell it today you would earn a total of  720.00  from holding Chesapeake Energy or generate 12.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	7.69%
Values	Daily Returns

Chesapeake Energy  vs.  Oxbridge Acquisition Equity

Chesapeake Energy

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Chesapeake Energy has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Oxbridge Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxbridge Acquisition Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Oxbridge Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chesapeake Energy and Oxbridge Acquisition

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

The idea behind Chesapeake Energy and Oxbridge Acquisition Equity 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.