Correlation Between Charter Communications and INDIKA ENERGY

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

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

Diversification Opportunities for Charter Communications and INDIKA ENERGY

-0.63

Correlation Coefficient

Charter Communications  INDIKA ENERGY

Excellent diversification

The 3 months correlation between Charter and INDIKA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Charter Communications i.e., Charter Communications and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between Charter Communications and INDIKA ENERGY

Assuming the 90 days trading horizon Charter Communications is expected to generate 4.09 times less return on investment than INDIKA ENERGY. But when comparing it to its historical volatility, Charter Communications is 2.08 times less risky than INDIKA ENERGY. It trades about 0.0 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13.00  in INDIKA ENERGY on October 23, 2024 and sell it today you would lose (4.00) from holding INDIKA ENERGY or give up 30.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Charter Communications  vs.  INDIKA ENERGY

Charter Communications

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

INDIKA ENERGY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, INDIKA ENERGY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Charter Communications and INDIKA ENERGY

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

The idea behind Charter Communications and INDIKA ENERGY 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.