Correlation Between Chesapeake Utilities and Addus HomeCare

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

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

Diversification Opportunities for Chesapeake Utilities and Addus HomeCare

-0.61

Correlation Coefficient

Chesapeake Utilities  Addus HomeCare

Excellent diversification

The 3 months correlation between Chesapeake and Addus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Chesapeake Utilities 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 Utilities are associated (or correlated) with Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Addus HomeCare go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and Addus HomeCare

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the Addus HomeCare. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 1.14 times less risky than Addus HomeCare. The stock trades about -0.1 of its potential returns per unit of risk. The Addus HomeCare is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,550  in Addus HomeCare on April 23, 2025 and sell it today you would earn a total of  750.00  from holding Addus HomeCare or generate 8.77% return on investment over 90 days.

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

Chesapeake Utilities  vs.  Addus HomeCare

Chesapeake Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chesapeake Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Addus HomeCare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Addus HomeCare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Chesapeake Utilities and Addus HomeCare

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

The idea behind Chesapeake Utilities and Addus HomeCare 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.