Correlation Between Charter Hall and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Charter Hall and TPG Telecom 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 TPG Telecom 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 TPG Telecom, you can compare the effects of market volatilities on Charter Hall and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and TPG Telecom.
Diversification Opportunities for Charter Hall and TPG Telecom
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charter and TPG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of Charter Hall i.e., Charter Hall and TPG Telecom go up and down completely randomly.
Pair Corralation between Charter Hall and TPG Telecom
Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 0.88 times more return on investment than TPG Telecom. However, Charter Hall Retail is 1.14 times less risky than TPG Telecom. It trades about 0.06 of its potential returns per unit of risk. TPG Telecom is currently generating about -0.01 per unit of risk. If you would invest 339.00 in Charter Hall Retail on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Charter Hall Retail or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. TPG Telecom
Performance |
| Timeline |
| Charter Hall Retail |
| TPG Telecom |
Charter Hall and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and TPG Telecom
The main advantage of trading using opposite Charter Hall and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.| Charter Hall vs. Leeuwin Metals | Charter Hall vs. Regis Healthcare | Charter Hall vs. DY6 Metals | Charter Hall vs. Oneview Healthcare PLC |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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