Correlation Between Lindian Resources and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Lindian Resources 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 Lindian Resources and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindian Resources and Charter Hall Education, you can compare the effects of market volatilities on Lindian Resources 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 Lindian Resources with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindian Resources and Charter Hall.
Diversification Opportunities for Lindian Resources and Charter Hall
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lindian and Charter is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lindian Resources 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 Lindian Resources 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 Lindian Resources 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 Lindian Resources i.e., Lindian Resources and Charter Hall go up and down completely randomly.
Pair Corralation between Lindian Resources and Charter Hall
Assuming the 90 days trading horizon Lindian Resources is expected to generate 5.37 times more return on investment than Charter Hall. However, Lindian Resources is 5.37 times more volatile than Charter Hall Education. It trades about -0.01 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.1 per unit of risk. If you would invest 9.10 in Lindian Resources on September 12, 2024 and sell it today you would lose (0.40) from holding Lindian Resources or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lindian Resources vs. Charter Hall Education
Performance |
| Timeline |
| Lindian Resources |
| Charter Hall Education |
Lindian Resources and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindian Resources and Charter Hall
The main advantage of trading using opposite Lindian Resources and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindian Resources 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.| Lindian Resources vs. Global Data Centre | Lindian Resources vs. MetalsGrove Mining | Lindian Resources vs. ABACUS STORAGE KING | Lindian Resources vs. Hutchison Telecommunications |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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