Correlation Between Charter Hall and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Falcon Metals 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 Falcon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Education and Falcon Metals, you can compare the effects of market volatilities on Charter Hall and Falcon Metals 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Falcon Metals.
Diversification Opportunities for Charter Hall and Falcon Metals
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charter and Falcon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals 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 Education are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Charter Hall i.e., Charter Hall and Falcon Metals go up and down completely randomly.
Pair Corralation between Charter Hall and Falcon Metals
Assuming the 90 days trading horizon Charter Hall Education is expected to under-perform the Falcon Metals. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Education is 4.33 times less risky than Falcon Metals. The stock trades about -0.1 of its potential returns per unit of risk. The Falcon Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Falcon Metals on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Falcon Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Education vs. Falcon Metals
Performance |
| Timeline |
| Charter Hall Education |
| Falcon Metals |
Charter Hall and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Falcon Metals
The main advantage of trading using opposite Charter Hall and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Charter Hall vs. Farm Pride Foods | Charter Hall vs. RLF AgTech | Charter Hall vs. Platinum Asia Investments | Charter Hall vs. Clime Investment Management |
| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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