Correlation Between Charter Hall and Microequities Asset
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Microequities Asset 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 Microequities Asset 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 Microequities Asset Management, you can compare the effects of market volatilities on Charter Hall and Microequities Asset 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 Microequities Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Microequities Asset.
Diversification Opportunities for Charter Hall and Microequities Asset
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charter and Microequities is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Microequities Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microequities Asset 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 Microequities Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microequities Asset has no effect on the direction of Charter Hall i.e., Charter Hall and Microequities Asset go up and down completely randomly.
Pair Corralation between Charter Hall and Microequities Asset
Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Microequities Asset. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 2.21 times less risky than Microequities Asset. The stock trades about -0.05 of its potential returns per unit of risk. The Microequities Asset Management is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Microequities Asset Management on August 29, 2024 and sell it today you would lose (2.00) from holding Microequities Asset Management or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Charter Hall Retail vs. Microequities Asset Management
Performance |
| Timeline |
| Charter Hall Retail |
| Microequities Asset |
Charter Hall and Microequities Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Microequities Asset
The main advantage of trading using opposite Charter Hall and Microequities Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Microequities Asset 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 Microequities Asset will offset losses from the drop in Microequities Asset's long position.| Charter Hall vs. Australian Unity Office | Charter Hall vs. Champion Iron | Charter Hall vs. Ridley | Charter Hall vs. Peel Mining |
| Microequities Asset vs. Champion Iron | Microequities Asset vs. Ridley | Microequities Asset vs. Peel Mining | Microequities Asset vs. Australian Dairy Farms |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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