Correlation Between Charter Communications and Concurrent Technologies
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Concurrent Technologies 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 Charter Communications and Concurrent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Concurrent Technologies Plc, you can compare the effects of market volatilities on Charter Communications and Concurrent Technologies 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 Charter Communications with a short position of Concurrent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Concurrent Technologies.
Diversification Opportunities for Charter Communications and Concurrent Technologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Concurrent is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Concurrent Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concurrent Technologies and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Concurrent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concurrent Technologies has no effect on the direction of Charter Communications i.e., Charter Communications and Concurrent Technologies go up and down completely randomly.
Pair Corralation between Charter Communications and Concurrent Technologies
Assuming the 90 days trading horizon Charter Communications Cl is expected to under-perform the Concurrent Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Charter Communications Cl is 1.43 times less risky than Concurrent Technologies. The stock trades about -0.34 of its potential returns per unit of risk. The Concurrent Technologies Plc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 14,100 in Concurrent Technologies Plc on October 11, 2024 and sell it today you would lose (250.00) from holding Concurrent Technologies Plc or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Charter Communications Cl vs. Concurrent Technologies Plc
Performance |
| Timeline |
| Charter Communications |
| Concurrent Technologies |
Charter Communications and Concurrent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Concurrent Technologies
The main advantage of trading using opposite Charter Communications and Concurrent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Concurrent Technologies 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 Concurrent Technologies will offset losses from the drop in Concurrent Technologies' long position.| Charter Communications vs. Aptitude Software Group | Charter Communications vs. Morgan Advanced Materials | Charter Communications vs. GlobalData PLC | Charter Communications vs. Martin Marietta Materials |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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