Correlation Between Hotel Property and Charter Hall

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Can any of the company-specific risk be diversified away by investing in both Hotel Property and Charter Hall 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 Hotel Property and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Property Investments and Charter Hall Education, you can compare the effects of market volatilities on Hotel Property and Charter Hall 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 Hotel Property with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Charter Hall.

Diversification Opportunities for Hotel Property and Charter Hall

HotelCharterDiversified AwayHotelCharterDiversified Away100%
-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Hotel and Charter is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Charter Hall Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Education and Hotel Property 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 Hotel Property Investments are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Education has no effect on the direction of Hotel Property i.e., Hotel Property and Charter Hall go up and down completely randomly.

Pair Corralation between Hotel Property and Charter Hall

Assuming the 90 days trading horizon Hotel Property is expected to generate 57.26 times less return on investment than Charter Hall. But when comparing it to its historical volatility, Hotel Property Investments is 12.56 times less risky than Charter Hall. It trades about 0.07 of its potential returns per unit of risk. Charter Hall Education is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  256.00  in Charter Hall Education on November 21, 2024 and sell it today you would earn a total of  41.00  from holding Charter Hall Education or generate 16.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hotel Property Investments  vs.  Charter Hall Education

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20246810
JavaScript chart by amCharts 3.21.15HPI CQE
       Timeline  
Hotel Property Inves 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Property Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Hotel Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3.63.653.73.753.83.85
Charter Hall Education 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Charter Hall Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Charter Hall unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.52.62.72.82.93

Hotel Property and Charter Hall Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.0-1.47-0.94-0.410.08150.61.131.662.19 0.20.40.60.8
JavaScript chart by amCharts 3.21.15HPI CQE
       Returns  

Pair Trading with Hotel Property and Charter Hall

The main advantage of trading using opposite Hotel Property and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall's long position.
The idea behind Hotel Property Investments and Charter Hall Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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