Correlation Between Australian Unity and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Australian Unity 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 Australian Unity and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Office and Charter Hall Education, you can compare the effects of market volatilities on Australian Unity 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 Australian Unity with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Charter Hall.
Diversification Opportunities for Australian Unity and Charter Hall
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and Charter is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office 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 Australian Unity 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 Australian Unity Office 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 Australian Unity i.e., Australian Unity and Charter Hall go up and down completely randomly.
Pair Corralation between Australian Unity and Charter Hall
Assuming the 90 days trading horizon Australian Unity Office is expected to under-perform the Charter Hall. In addition to that, Australian Unity is 1.43 times more volatile than Charter Hall Education. It trades about -0.2 of its total potential returns per unit of risk. Charter Hall Education is currently generating about 0.12 per unit of volatility. If you would invest 261.00 in Charter Hall Education on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Charter Hall Education or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Charter Hall Education
Performance |
| Timeline |
| Australian Unity Office |
| Charter Hall Education |
Australian Unity and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Charter Hall
The main advantage of trading using opposite Australian Unity and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity 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.| Australian Unity vs. Scentre Group | Australian Unity vs. Vicinity Centres Re | Australian Unity vs. Charter Hall Retail | Australian Unity vs. Cromwell Property Group |
| Charter Hall vs. Scentre Group | Charter Hall vs. Vicinity Centres Re | Charter Hall vs. Charter Hall Retail | Charter Hall vs. Cromwell 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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