Correlation Between OPERA SOFTWARE and Chesapeake Utilities

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

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

Diversification Opportunities for OPERA SOFTWARE and Chesapeake Utilities

-0.86

Correlation Coefficient

OPERA SOFTWARE  Chesapeake Utilities

Pay attention - limited upside

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

Pair Corralation between OPERA SOFTWARE and Chesapeake Utilities

Assuming the 90 days trading horizon OPERA SOFTWARE is expected to generate 1.4 times more return on investment than Chesapeake Utilities. However, OPERA SOFTWARE is 1.4 times more volatile than Chesapeake Utilities. It trades about 0.32 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.1 per unit of risk. 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

OPERA SOFTWARE  vs.  Chesapeake Utilities

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.

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.

Pair Trading with OPERA SOFTWARE and Chesapeake Utilities

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

The idea behind OPERA SOFTWARE and Chesapeake Utilities 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.