Correlation Between Charter Communications and Altice USA

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

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

Diversification Opportunities for Charter Communications and Altice USA

0.13

Correlation Coefficient

Charter Communications  Altice USA

Average diversification

The 3 months correlation between Charter and Altice is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA 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 Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of Charter Communications i.e., Charter Communications and Altice USA go up and down completely randomly.

Pair Corralation between Charter Communications and Altice USA

Given the investment horizon of 90 days Charter Communications is expected to generate 1.71 times less return on investment than Altice USA. But when comparing it to its historical volatility, Charter Communications is 1.78 times less risky than Altice USA. It trades about 0.11 of its potential returns per unit of risk. Altice USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Altice USA on December 29, 2024 and sell it today you would earn a total of  43.00  from holding Altice USA or generate 18.38% return on investment over 90 days.

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

Charter Communications  vs.  Altice USA

Charter Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Altice USA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and Altice USA

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

The idea behind Charter Communications and Altice USA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.