Correlation Between Chesapeake Utilities and OPERA SOFTWARE

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

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

Diversification Opportunities for Chesapeake Utilities and OPERA SOFTWARE

-0.86

Correlation Coefficient

Chesapeake Utilities  OPERA SOFTWARE

Pay attention - limited upside

The 3 months correlation between Chesapeake and OPERA is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and OPERA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERA SOFTWARE 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 OPERA SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERA SOFTWARE has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and OPERA SOFTWARE go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and OPERA SOFTWARE

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the OPERA SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 1.4 times less risky than OPERA SOFTWARE. The stock trades about -0.1 of its potential returns per unit of risk. The OPERA SOFTWARE is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  72.00  in OPERA SOFTWARE on April 22, 2025 and sell it today you would earn a total of  40.00  from holding OPERA SOFTWARE or generate 55.56% return on investment over 90 days.

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

Chesapeake Utilities  vs.  OPERA SOFTWARE

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.

OPERA SOFTWARE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OPERA SOFTWARE are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OPERA SOFTWARE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Utilities and OPERA SOFTWARE

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

The idea behind Chesapeake Utilities and OPERA SOFTWARE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.