Correlation Between Charter Communications and Cemepe Investimentos

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

By analyzing existing cross correlation between Charter Communications and Cemepe Investimentos SA, you can compare the effects of market volatilities on Charter Communications and Cemepe Investimentos 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 Cemepe Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Cemepe Investimentos.

Diversification Opportunities for Charter Communications and Cemepe Investimentos

-0.04

Correlation Coefficient

Charter Communications  Cemepe Investimentos

Good diversification

The 3 months correlation between Charter and Cemepe is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Cemepe Investimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemepe Investimentos 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 are associated (or correlated) with Cemepe Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemepe Investimentos has no effect on the direction of Charter Communications i.e., Charter Communications and Cemepe Investimentos go up and down completely randomly.

Pair Corralation between Charter Communications and Cemepe Investimentos

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.0 times more return on investment than Cemepe Investimentos. However, Charter Communications is 1.0 times more volatile than Cemepe Investimentos SA. It trades about -0.08 of its potential returns per unit of risk. Cemepe Investimentos SA is currently generating about -0.09 per unit of risk. If you would invest  4,068  in Charter Communications on December 4, 2024 and sell it today you would lose (497.00) from holding Charter Communications or give up 12.22% of portfolio value over 90 days.

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

Charter Communications  vs.  Cemepe Investimentos SA

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cemepe Investimentos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cemepe Investimentos SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 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 Cemepe Investimentos

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

The idea behind Charter Communications and Cemepe Investimentos SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.