Correlation Between Chesapeake Utilities and First Quantum

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

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

Diversification Opportunities for Chesapeake Utilities and First Quantum

-0.65

Correlation Coefficient

Chesapeake Utilities  First Quantum

Excellent diversification

The 3 months correlation between Chesapeake and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and First Quantum go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and First Quantum

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 1.31 times less risky than First Quantum. The stock trades about -0.09 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,150  in First Quantum Minerals on April 24, 2025 and sell it today you would earn a total of  363.00  from holding First Quantum Minerals or generate 31.57% 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.  First Quantum Minerals

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.

First Quantum Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, First Quantum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Utilities and First Quantum

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

The idea behind Chesapeake Utilities and First Quantum Minerals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.