Correlation Between Charter Communications and SENECA FOODS-A

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

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

Diversification Opportunities for Charter Communications and SENECA FOODS-A

-0.44

Correlation Coefficient

Charter Communications  SENECA FOODS-A

Very good diversification

The 3 months correlation between Charter and SENECA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Charter Communications i.e., Charter Communications and SENECA FOODS-A go up and down completely randomly.

Pair Corralation between Charter Communications and SENECA FOODS-A

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the SENECA FOODS-A. In addition to that, Charter Communications is 1.0 times more volatile than SENECA FOODS A. It trades about -0.08 of its total potential returns per unit of risk. SENECA FOODS A is currently generating about 0.15 per unit of volatility. If you would invest  6,450  in SENECA FOODS A on November 29, 2024 and sell it today you would earn a total of  1,100  from holding SENECA FOODS A or generate 17.05% return on investment over 90 days.

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

Charter Communications  vs.  SENECA FOODS A

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SENECA FOODS A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and SENECA FOODS-A

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

The idea behind Charter Communications and SENECA FOODS A 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.