Correlation Between SYSTEMAIR and Charter Communications
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and Charter Communications 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 SYSTEMAIR and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Charter Communications, you can compare the effects of market volatilities on SYSTEMAIR and Charter Communications 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 SYSTEMAIR with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Charter Communications.
Diversification Opportunities for SYSTEMAIR and Charter Communications
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SYSTEMAIR and Charter is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Charter Communications go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Charter Communications
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, SYSTEMAIR AB is 1.38 times less risky than Charter Communications. The stock trades about -0.22 of its potential returns per unit of risk. The Charter Communications is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 35,140 in Charter Communications on October 10, 2024 and sell it today you would lose (1,545) from holding Charter Communications or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
SYSTEMAIR AB vs. Charter Communications
Performance |
| Timeline |
| SYSTEMAIR AB |
| Charter Communications |
SYSTEMAIR and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Charter Communications
The main advantage of trading using opposite SYSTEMAIR and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| SYSTEMAIR vs. Air Transport Services | SYSTEMAIR vs. GOLD ROAD RES | SYSTEMAIR vs. KINGBOARD CHEMICAL | SYSTEMAIR vs. AIR PRODCHEMICALS |
| Charter Communications vs. Hua Hong Semiconductor | Charter Communications vs. Elmos Semiconductor SE | Charter Communications vs. MagnaChip Semiconductor Corp | Charter Communications vs. JLF 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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