Correlation Between Charter Communications and HK Electric
Can any of the company-specific risk be diversified away by investing in both Charter Communications and HK Electric 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 HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and HK Electric Investments, you can compare the effects of market volatilities on Charter Communications and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and HK Electric.
Diversification Opportunities for Charter Communications and HK Electric
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Charter and HKT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Charter Communications i.e., Charter Communications and HK Electric go up and down completely randomly.
Pair Corralation between Charter Communications and HK Electric
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.84 times more return on investment than HK Electric. However, Charter Communications is 1.84 times more volatile than HK Electric Investments. It trades about 0.06 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.03 per unit of risk. If you would invest 33,200 in Charter Communications on December 30, 2024 and sell it today you would earn a total of 1,960 from holding Charter Communications or generate 5.9% 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. HK Electric Investments
Performance |
Timeline |
Charter Communications |
HK Electric Investments |
Charter Communications and HK Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Charter Communications and HK Electric
The main advantage of trading using opposite Charter Communications and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.Charter Communications vs. THAI BEVERAGE | Charter Communications vs. PennyMac Mortgage Investment | Charter Communications vs. Gladstone Investment | Charter Communications vs. AGNC INVESTMENT |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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