Correlation Between Charter Hall and Auckland International
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Auckland International 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 Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on Charter Hall and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Auckland International.
Diversification Opportunities for Charter Hall and Auckland International
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charter and Auckland is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Charter Hall i.e., Charter Hall and Auckland International go up and down completely randomly.
Pair Corralation between Charter Hall and Auckland International
Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 0.95 times more return on investment than Auckland International. However, Charter Hall Retail is 1.05 times less risky than Auckland International. It trades about 0.26 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.32 per unit of risk. If you would invest 321.00 in Charter Hall Retail on November 28, 2024 and sell it today you would earn a total of 21.00 from holding Charter Hall Retail or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. Auckland International Airport
Performance |
| Timeline |
| Charter Hall Retail |
| Auckland International |
Charter Hall and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Auckland International
The main advantage of trading using opposite Charter Hall and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| Charter Hall vs. Argo Investments | Charter Hall vs. REGAL ASIAN INVESTMENTS | Charter Hall vs. ChemX Materials | Charter Hall vs. Carlton Investments |
| Auckland International vs. Charter Hall Retail | Auckland International vs. Perseus Mining | Auckland International vs. Gateway Mining | Auckland International vs. Truscott Mining Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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