Correlation Between ABACUS STORAGE and Charter Hall

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

By analyzing existing cross correlation between ABACUS STORAGE KING and Charter Hall Education, you can compare the effects of market volatilities on ABACUS STORAGE 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 ABACUS STORAGE with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Charter Hall.

Diversification Opportunities for ABACUS STORAGE and Charter Hall

0.84

Correlation Coefficient

ABACUS STORAGE  Charter Hall

Very poor diversification

The 3 months correlation between ABACUS and Charter is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING 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 ABACUS STORAGE 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 ABACUS STORAGE KING 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 ABACUS STORAGE i.e., ABACUS STORAGE and Charter Hall go up and down completely randomly.

Pair Corralation between ABACUS STORAGE and Charter Hall

Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to generate 34.76 times more return on investment than Charter Hall. However, ABACUS STORAGE is 34.76 times more volatile than Charter Hall Education. It trades about 0.05 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.01 per unit of risk. If you would invest  125.00  in ABACUS STORAGE KING on October 11, 2024 and sell it today you would lose (12.00) from holding ABACUS STORAGE KING or give up 9.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	73.75%
Values	Daily Returns

ABACUS STORAGE KING  vs.  Charter Hall Education

ABACUS STORAGE KING

Risk-Adjusted Performance

0 of 100

Very Weak

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

Charter Hall Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ABACUS STORAGE and Charter Hall

The main advantage of trading using opposite ABACUS STORAGE and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABACUS STORAGE 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.

The idea behind ABACUS STORAGE KING and Charter Hall Education 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.