Correlation Between Charter Communications and Alfa Holdings
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Alfa Holdings 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 Charter Communications and Alfa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Alfa Holdings SA, you can compare the effects of market volatilities on Charter Communications and Alfa Holdings 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 Charter Communications with a short position of Alfa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Alfa Holdings.
Diversification Opportunities for Charter Communications and Alfa Holdings
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charter and Alfa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA and Charter 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 Charter Communications are associated (or correlated) with Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Charter Communications i.e., Charter Communications and Alfa Holdings go up and down completely randomly.
Pair Corralation between Charter Communications and Alfa Holdings
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.24 times more return on investment than Alfa Holdings. However, Charter Communications is 1.24 times more volatile than Alfa Holdings SA. It trades about 0.25 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about 0.06 per unit of risk. If you would invest 3,144 in Charter Communications on August 29, 2024 and sell it today you would earn a total of 632.00 from holding Charter Communications or generate 20.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Alfa Holdings SA
Performance |
| Timeline |
| Charter Communications |
| Alfa Holdings SA |
Charter Communications and Alfa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Alfa Holdings
The main advantage of trading using opposite Charter Communications and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Alfa Holdings 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 Alfa Holdings will offset losses from the drop in Alfa Holdings' long position.| Charter Communications vs. Fras le SA | Charter Communications vs. Clave Indices De | Charter Communications vs. BTG Pactual Logstica | Charter Communications vs. Telefonaktiebolaget LM Ericsson |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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