Correlation Between ClearOne and Chesapeake Energy

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

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

Diversification Opportunities for ClearOne and Chesapeake Energy

0.63

Correlation Coefficient

ClearOne  Chesapeake Energy

Poor diversification

The 3 months correlation between ClearOne and Chesapeake is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ClearOne and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and ClearOne 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 ClearOne are associated (or correlated) with Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of ClearOne i.e., ClearOne and Chesapeake Energy go up and down completely randomly.

Pair Corralation between ClearOne and Chesapeake Energy

Given the investment horizon of 90 days ClearOne is expected to generate 4.72 times more return on investment than Chesapeake Energy. However, ClearOne is 4.72 times more volatile than Chesapeake Energy. It trades about 0.03 of its potential returns per unit of risk. Chesapeake Energy is currently generating about 0.01 per unit of risk. If you would invest  55.00  in ClearOne on September 27, 2024 and sell it today you would earn a total of  4.00  from holding ClearOne or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.0%
Values	Daily Returns

ClearOne  vs.  Chesapeake Energy

ClearOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ClearOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ClearOne is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Chesapeake Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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 strong technical and fundamental indicators, Chesapeake Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ClearOne and Chesapeake Energy

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

The idea behind ClearOne and Chesapeake Energy 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.