Correlation Between K2 Asset and Charter Hall
Can any of the company-specific risk be diversified away by investing in both K2 Asset 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 K2 Asset and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Charter Hall Education, you can compare the effects of market volatilities on K2 Asset 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 K2 Asset with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Charter Hall.
Diversification Opportunities for K2 Asset and Charter Hall
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAM and Charter is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management 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 K2 Asset 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 K2 Asset Management 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 K2 Asset i.e., K2 Asset and Charter Hall go up and down completely randomly.
Pair Corralation between K2 Asset and Charter Hall
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 3.29 times more return on investment than Charter Hall. However, K2 Asset is 3.29 times more volatile than Charter Hall Education. It trades about 0.05 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.02 per unit of risk. If you would invest 3.80 in K2 Asset Management on September 12, 2024 and sell it today you would earn a total of 3.90 from holding K2 Asset Management or generate 102.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Charter Hall Education
Performance |
| Timeline |
| K2 Asset Management |
| Charter Hall Education |
K2 Asset and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Charter Hall
The main advantage of trading using opposite K2 Asset and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset 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.| K2 Asset vs. Retail Food Group | K2 Asset vs. Dicker Data | K2 Asset vs. Sandon Capital Investments | K2 Asset vs. BKI Investment |
| Charter Hall vs. Dexus Convenience Retail | Charter Hall vs. K2 Asset Management | Charter Hall vs. Regal Funds Management | Charter Hall vs. Carawine Resources Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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