Correlation Between Charter Hall and Challenger
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Challenger 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 Challenger 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 Challenger, you can compare the effects of market volatilities on Charter Hall and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Challenger.
Diversification Opportunities for Charter Hall and Challenger
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charter and Challenger is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Charter Hall i.e., Charter Hall and Challenger go up and down completely randomly.
Pair Corralation between Charter Hall and Challenger
Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Challenger. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 1.22 times less risky than Challenger. The stock trades about -0.07 of its potential returns per unit of risk. The Challenger is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 605.00 in Challenger on October 28, 2024 and sell it today you would earn a total of 18.00 from holding Challenger or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. Challenger
Performance |
| Timeline |
| Charter Hall Retail |
| Challenger |
Charter Hall and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Challenger
The main advantage of trading using opposite Charter Hall and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Charter Hall vs. Readytech Holdings | Charter Hall vs. Neurotech International | Charter Hall vs. WiseTech Global Limited | Charter Hall vs. Genetic Technologies |
| Challenger vs. Charter Hall Retail | Challenger vs. Balkan Mining and | Challenger vs. Duketon Mining | Challenger vs. Aspire Mining |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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