Correlation Between CHARTER and Bel Fuse

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

Diversification Opportunities for CHARTER and Bel Fuse

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between CHARTER and Bel is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CHARTER MUNICATIONS OPERATING and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A and CHARTER 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 MUNICATIONS OPERATING are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of CHARTER i.e., CHARTER and Bel Fuse go up and down completely randomly.

Pair Corralation between CHARTER and Bel Fuse

Assuming the 90 days trading horizon CHARTER is expected to generate 66.05 times less return on investment than Bel Fuse. But when comparing it to its historical volatility, CHARTER MUNICATIONS OPERATING is 4.68 times less risky than Bel Fuse. It trades about 0.01 of its potential returns per unit of risk. Bel Fuse A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,161  in Bel Fuse A on August 30, 2024 and sell it today you would earn a total of  6,429  from holding Bel Fuse A or generate 203.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy96.36%
ValuesDaily Returns

CHARTER MUNICATIONS OPERATING  vs.  Bel Fuse A

 Performance 
       Timeline  
CHARTER MUNICATIONS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CHARTER MUNICATIONS OPERATING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CHARTER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Bel Fuse A 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Bel Fuse A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Bel Fuse may actually be approaching a critical reversion point that can send shares even higher in December 2024.

CHARTER and Bel Fuse Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CHARTER and Bel Fuse

The main advantage of trading using opposite CHARTER and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHARTER position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.
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The idea behind CHARTER MUNICATIONS OPERATING and Bel Fuse A 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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