Correlation Between Charter Hall and ARN Media
Can any of the company-specific risk be diversified away by investing in both Charter Hall and ARN Media 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 ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Retail and ARN Media Limited, you can compare the effects of market volatilities on Charter Hall and ARN Media 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 ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and ARN Media.
Diversification Opportunities for Charter Hall and ARN Media
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Charter and ARN is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited 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 Retail are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Charter Hall i.e., Charter Hall and ARN Media go up and down completely randomly.
Pair Corralation between Charter Hall and ARN Media
Assuming the 90 days trading horizon Charter Hall is expected to generate 8.56 times less return on investment than ARN Media. But when comparing it to its historical volatility, Charter Hall Retail is 2.13 times less risky than ARN Media. It trades about 0.02 of its potential returns per unit of risk. ARN Media Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 62.00 in ARN Media Limited on December 13, 2024 and sell it today you would earn a total of 2.00 from holding ARN Media Limited or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. ARN Media Limited
Performance |
| Timeline |
| Charter Hall Retail |
| ARN Media Limited |
Charter Hall and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and ARN Media
The main advantage of trading using opposite Charter Hall and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Charter Hall vs. Saferoads Holdings | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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