Correlation Between Charter Communications and Hammerson PLC

Can any of the company-specific risk be diversified away by investing in both Charter Communications and Hammerson PLC 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 Communications and Hammerson PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications Cl and Hammerson PLC, you can compare the effects of market volatilities on Charter Communications and Hammerson PLC 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 Communications with a short position of Hammerson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Hammerson PLC.

Diversification Opportunities for Charter Communications and Hammerson PLC

-0.81

Correlation Coefficient

Charter Communications  Hammerson PLC

Pay attention - limited upside

The 3 months correlation between Charter and Hammerson is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC and Charter Communications 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 Communications Cl are associated (or correlated) with Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of Charter Communications i.e., Charter Communications and Hammerson PLC go up and down completely randomly.

Pair Corralation between Charter Communications and Hammerson PLC

Assuming the 90 days trading horizon Charter Communications Cl is expected to under-perform the Hammerson PLC. In addition to that, Charter Communications is 1.5 times more volatile than Hammerson PLC. It trades about -0.2 of its total potential returns per unit of risk. Hammerson PLC is currently generating about -0.16 per unit of volatility. If you would invest  28,880  in Hammerson PLC on September 25, 2024 and sell it today you would lose (1,360) from holding Hammerson PLC or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Charter Communications Cl  vs.  Hammerson PLC

Charter Communications

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hammerson PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hammerson PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Charter Communications and Hammerson PLC

The main advantage of trading using opposite Charter Communications and Hammerson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Hammerson PLC 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 Hammerson PLC will offset losses from the drop in Hammerson PLC's long position.

The idea behind Charter Communications Cl and Hammerson PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.