Correlation Between Charter Communications and China Sanjiang

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

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

Diversification Opportunities for Charter Communications and China Sanjiang

-0.04

Correlation Coefficient

Charter Communications  China Sanjiang

Good diversification

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

Pair Corralation between Charter Communications and China Sanjiang

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the China Sanjiang. But the stock apears to be less risky and, when comparing its historical volatility, Charter Communications is 1.74 times less risky than China Sanjiang. The stock trades about -0.03 of its potential returns per unit of risk. The China Sanjiang Fine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20.00  in China Sanjiang Fine on December 22, 2024 and sell it today you would earn a total of  2.00  from holding China Sanjiang Fine or generate 10.0% return on investment over 90 days.

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

Charter Communications  vs.  China Sanjiang Fine

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. In spite of comparatively stable basic indicators, Charter Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

China Sanjiang Fine

Risk-Adjusted Performance

Modest

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

Pair Trading with Charter Communications and China Sanjiang

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

The idea behind Charter Communications and China Sanjiang Fine 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.