Correlation Between Charter Hall and 29Metals
Can any of the company-specific risk be diversified away by investing in both Charter Hall and 29Metals 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 Hall and 29Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Long and 29Metals, you can compare the effects of market volatilities on Charter Hall and 29Metals 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 Hall with a short position of 29Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and 29Metals.
Diversification Opportunities for Charter Hall and 29Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and 29Metals is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Long and 29Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 29Metals and Charter Hall 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 Hall Long are associated (or correlated) with 29Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 29Metals has no effect on the direction of Charter Hall i.e., Charter Hall and 29Metals go up and down completely randomly.
Pair Corralation between Charter Hall and 29Metals
Assuming the 90 days trading horizon Charter Hall Long is expected to generate 0.24 times more return on investment than 29Metals. However, Charter Hall Long is 4.22 times less risky than 29Metals. It trades about 0.01 of its potential returns per unit of risk. 29Metals is currently generating about -0.03 per unit of risk. If you would invest 395.00 in Charter Hall Long on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Charter Hall Long or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Long vs. 29Metals
Performance |
| Timeline |
| Charter Hall Long |
| 29Metals |
Charter Hall and 29Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and 29Metals
The main advantage of trading using opposite Charter Hall and 29Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, 29Metals 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 29Metals will offset losses from the drop in 29Metals' long position.| Charter Hall vs. Stelar Metals | Charter Hall vs. Richmond Vanadium Technology | Charter Hall vs. Computershare | Charter Hall vs. oOhMedia |
| 29Metals vs. Northern Star Resources | 29Metals vs. Evolution Mining | 29Metals vs. Bluescope Steel | 29Metals vs. Sandfire Resources NL |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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