Correlation Between Charter Communications and Singapore Reinsurance

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

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

Diversification Opportunities for Charter Communications and Singapore Reinsurance

0.91

Correlation Coefficient

Charter Communications  Singapore Reinsurance

Almost no diversification

The 3 months correlation between Charter and Singapore is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of Charter Communications i.e., Charter Communications and Singapore Reinsurance go up and down completely randomly.

Pair Corralation between Charter Communications and Singapore Reinsurance

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.14 times less return on investment than Singapore Reinsurance. In addition to that, Charter Communications is 1.36 times more volatile than Singapore Reinsurance. It trades about 0.09 of its total potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.14 per unit of volatility. If you would invest  2,800  in Singapore Reinsurance on September 15, 2024 and sell it today you would earn a total of  620.00  from holding Singapore Reinsurance or generate 22.14% return on investment over 90 days.

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

Charter Communications  vs.  Singapore Reinsurance

Charter Communications

Risk-Adjusted Performance

7 of 100

OK

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

Singapore Reinsurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Singapore Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and Singapore Reinsurance

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

The idea behind Charter Communications and Singapore Reinsurance 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.