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 Retail, 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
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Charter is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail 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 Retail 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 under-perform the Charter Hall. In addition to that, Air New is 1.07 times more volatile than Charter Hall Retail. It trades about -0.03 of its total potential returns per unit of risk. Charter Hall Retail is currently generating about 0.0 per unit of volatility. If you would invest 352.00 in Charter Hall Retail on August 26, 2024 and sell it today you would lose (12.00) from holding Charter Hall Retail or give up 3.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Charter Hall Retail
Performance |
| Timeline |
| Air New Zealand |
| Charter Hall Retail |
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. Bio Gene Technology | Air New vs. Computershare | Air New vs. Hutchison Telecommunications | Air New vs. BTC Health Limited |
| Charter Hall vs. Scentre Group | Charter Hall vs. Vicinity Centres Re | Charter Hall vs. Cromwell Property Group | Charter Hall vs. GDI Property Group |
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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