Correlation Between Charter Communications and XLMedia PLC

Can any of the company-specific risk be diversified away by investing in both Charter Communications and XLMedia 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 XLMedia 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 XLMedia PLC, you can compare the effects of market volatilities on Charter Communications and XLMedia 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and XLMedia PLC.

Diversification Opportunities for Charter Communications and XLMedia PLC

0.62

Correlation Coefficient

Charter Communications  XLMedia PLC

Poor diversification

The 3 months correlation between Charter and XLMedia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Charter Communications i.e., Charter Communications and XLMedia PLC go up and down completely randomly.

Pair Corralation between Charter Communications and XLMedia PLC

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.51 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, Charter Communications Cl is 1.91 times less risky than XLMedia PLC. It trades about 0.04 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  920.00  in XLMedia PLC on October 12, 2024 and sell it today you would earn a total of  15.00  from holding XLMedia PLC or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Charter Communications Cl  vs.  XLMedia PLC

Charter Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Charter Communications is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

XLMedia PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, XLMedia PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Charter Communications and XLMedia PLC

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

The idea behind Charter Communications Cl and XLMedia 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.