Correlation Between Beam Communications and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Beam Communications 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 Beam Communications and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beam Communications Holdings and Charter Hall Education, you can compare the effects of market volatilities on Beam Communications 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 Beam Communications with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beam Communications and Charter Hall.
Diversification Opportunities for Beam Communications and Charter Hall
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beam and Charter is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Beam Communications Holdings 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 Beam 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 Beam Communications Holdings 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 Beam Communications i.e., Beam Communications and Charter Hall go up and down completely randomly.
Pair Corralation between Beam Communications and Charter Hall
Assuming the 90 days trading horizon Beam Communications Holdings is expected to generate 3.92 times more return on investment than Charter Hall. However, Beam Communications is 3.92 times more volatile than Charter Hall Education. It trades about 0.12 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.01 per unit of risk. If you would invest 6.20 in Beam Communications Holdings on November 9, 2024 and sell it today you would earn a total of 0.60 from holding Beam Communications Holdings or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beam Communications Holdings vs. Charter Hall Education
Performance |
| Timeline |
| Beam Communications |
| Charter Hall Education |
Beam Communications and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beam Communications and Charter Hall
The main advantage of trading using opposite Beam Communications and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beam Communications 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.| Beam Communications vs. Westpac Banking | Beam Communications vs. Ecofibre | Beam Communications vs. iShares Global Healthcare | Beam Communications vs. Australian Dairy Farms |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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