Correlation Between Resmed and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Resmed 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 Resmed and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resmed Inc DRC and Charter Hall Retail, you can compare the effects of market volatilities on Resmed 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 Resmed with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resmed and Charter Hall.
Diversification Opportunities for Resmed and Charter Hall
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Resmed and Charter is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail and Resmed 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 Resmed Inc DRC 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 Retail has no effect on the direction of Resmed i.e., Resmed and Charter Hall go up and down completely randomly.
Pair Corralation between Resmed and Charter Hall
Assuming the 90 days trading horizon Resmed Inc DRC is expected to generate 1.55 times more return on investment than Charter Hall. However, Resmed is 1.55 times more volatile than Charter Hall Retail. It trades about 0.04 of its potential returns per unit of risk. Charter Hall Retail is currently generating about -0.01 per unit of risk. If you would invest 3,180 in Resmed Inc DRC on September 12, 2024 and sell it today you would earn a total of 639.00 from holding Resmed Inc DRC or generate 20.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resmed Inc DRC vs. Charter Hall Retail
Performance |
| Timeline |
| Resmed Inc DRC |
| Charter Hall Retail |
Resmed and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resmed and Charter Hall
The main advantage of trading using opposite Resmed and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resmed 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.| Resmed vs. Hutchison Telecommunications | Resmed vs. Toys R Us | Resmed vs. Land Homes Group | Resmed vs. Actinogen Medical |
| Charter Hall vs. Falcon Metals | Charter Hall vs. Homeco Daily Needs | Charter Hall vs. Austco Healthcare | Charter Hall vs. Fisher Paykel Healthcare |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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