Correlation Between Charter Hall and Clime Investment

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

By analyzing existing cross correlation between Charter Hall Education and Clime Investment Management, you can compare the effects of market volatilities on Charter Hall and Clime Investment 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 Hall with a short position of Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Clime Investment.

Diversification Opportunities for Charter Hall and Clime Investment

0.72

Correlation Coefficient

Charter Hall  Clime Investment

Poor diversification

The 3 months correlation between Charter and Clime is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man and Charter Hall 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 Hall Education are associated (or correlated) with Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Charter Hall i.e., Charter Hall and Clime Investment go up and down completely randomly.

Pair Corralation between Charter Hall and Clime Investment

Assuming the 90 days trading horizon Charter Hall is expected to generate 1.16 times less return on investment than Clime Investment. In addition to that, Charter Hall is 1.2 times more volatile than Clime Investment Management. It trades about 0.24 of its total potential returns per unit of risk. Clime Investment Management is currently generating about 0.34 per unit of volatility. If you would invest  35.00  in Clime Investment Management on November 29, 2024 and sell it today you would earn a total of  5.00  from holding Clime Investment Management or generate 14.29% return on investment over 90 days.

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

Charter Hall Education  vs.  Clime Investment Management

Charter Hall Education

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Hall Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Charter Hall may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Clime Investment Man

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Clime Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Hall and Clime Investment

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

The idea behind Charter Hall Education and Clime Investment Management 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.