Correlation Between Charter Hall and Strickland Metals
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Strickland 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 Strickland 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 Strickland Metals, you can compare the effects of market volatilities on Charter Hall and Strickland 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 Strickland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Strickland Metals.
Diversification Opportunities for Charter Hall and Strickland Metals
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Charter and Strickland is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Strickland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strickland 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 Strickland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strickland Metals has no effect on the direction of Charter Hall i.e., Charter Hall and Strickland Metals go up and down completely randomly.
Pair Corralation between Charter Hall and Strickland Metals
Assuming the 90 days trading horizon Charter Hall is expected to generate 14.37 times less return on investment than Strickland Metals. But when comparing it to its historical volatility, Charter Hall Education is 5.61 times less risky than Strickland Metals. It trades about 0.04 of its potential returns per unit of risk. Strickland Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7.40 in Strickland Metals on August 29, 2024 and sell it today you would earn a total of 0.70 from holding Strickland Metals or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Education vs. Strickland Metals
Performance |
| Timeline |
| Charter Hall Education |
| Strickland Metals |
Charter Hall and Strickland Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Strickland Metals
The main advantage of trading using opposite Charter Hall and Strickland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Strickland 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 Strickland Metals will offset losses from the drop in Strickland Metals' long position.| Charter Hall vs. Australian Unity Office | Charter Hall vs. Champion Iron | Charter Hall vs. Ridley | Charter Hall vs. Peel Mining |
| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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