Correlation Between Air New and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Air New and Charter Hall 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 Air New and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Charter Hall Education, you can compare the effects of market volatilities on Air New and Charter Hall 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 Air New with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Charter Hall.
Diversification Opportunities for Air New and Charter Hall
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Charter is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Charter Hall Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Education and Air New 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 Air New Zealand are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Education has no effect on the direction of Air New i.e., Air New and Charter Hall go up and down completely randomly.
Pair Corralation between Air New and Charter Hall
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.55 times more return on investment than Charter Hall. However, Air New is 1.55 times more volatile than Charter Hall Education. It trades about 0.07 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.14 per unit of risk. If you would invest 54.00 in Air New Zealand on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Air New Zealand or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Charter Hall Education
Performance |
| Timeline |
| Air New Zealand |
| Charter Hall Education |
Air New and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Charter Hall
The main advantage of trading using opposite Air New and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Charter Hall 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 Hall will offset losses from the drop in Charter Hall's long position.| Air New vs. Seven West Media | Air New vs. Viva Leisure | Air New vs. Dexus Convenience Retail | Air New vs. Sports Entertainment Group |
| Charter Hall vs. IDP Education | Charter Hall vs. Gold Road Resources | Charter Hall vs. Duxton Broadacre Farms | Charter Hall vs. Sonic Healthcare |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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