Correlation Between Chesapeake Utilities and AdCapital

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

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

Diversification Opportunities for Chesapeake Utilities and AdCapital

0.52

Correlation Coefficient

Chesapeake Utilities  AdCapital

Very weak diversification

The 3 months correlation between Chesapeake and AdCapital is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and AdCapital AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdCapital AG 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 AdCapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdCapital AG has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and AdCapital go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and AdCapital

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the AdCapital. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 1.68 times less risky than AdCapital. The stock trades about -0.1 of its potential returns per unit of risk. The AdCapital AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  155.00  in AdCapital AG on April 22, 2025 and sell it today you would earn a total of  1.00  from holding AdCapital AG or generate 0.65% return on investment over 90 days.

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

Chesapeake Utilities  vs.  AdCapital AG

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 fragile 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.

AdCapital AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AdCapital AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AdCapital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chesapeake Utilities and AdCapital

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

The idea behind Chesapeake Utilities and AdCapital AG 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.