Correlation Between Charter Communications and GuocoLand

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

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

Diversification Opportunities for Charter Communications and GuocoLand

0.82

Correlation Coefficient

Charter Communications  GuocoLand

Very poor diversification

The 3 months correlation between Charter and GuocoLand is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited 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 GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of Charter Communications i.e., Charter Communications and GuocoLand go up and down completely randomly.

Pair Corralation between Charter Communications and GuocoLand

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the GuocoLand. In addition to that, Charter Communications is 3.79 times more volatile than GuocoLand Limited. It trades about -0.1 of its total potential returns per unit of risk. GuocoLand Limited is currently generating about -0.12 per unit of volatility. If you would invest  107.00  in GuocoLand Limited on October 11, 2024 and sell it today you would lose (3.00) from holding GuocoLand Limited or give up 2.8% of portfolio value over 90 days.

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

Charter Communications  vs.  GuocoLand Limited

Charter Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

GuocoLand Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GuocoLand is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Charter Communications and GuocoLand

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

The idea behind Charter Communications and GuocoLand Limited 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.