Correlation Between Charter Hall and Infomedia

Can any of the company-specific risk be diversified away by investing in both Charter Hall and Infomedia 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 Infomedia 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 Infomedia, you can compare the effects of market volatilities on Charter Hall and Infomedia 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 Infomedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Infomedia.

Diversification Opportunities for Charter Hall and Infomedia

0.8

Correlation Coefficient

Charter Hall  Infomedia

Very poor diversification

The 3 months correlation between Charter and Infomedia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Infomedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infomedia 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 Infomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infomedia has no effect on the direction of Charter Hall i.e., Charter Hall and Infomedia go up and down completely randomly.

Pair Corralation between Charter Hall and Infomedia

Assuming the 90 days trading horizon Charter Hall Education is expected to under-perform the Infomedia. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Education is 2.54 times less risky than Infomedia. The stock trades about -0.1 of its potential returns per unit of risk. The Infomedia is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Infomedia on September 26, 2024 and sell it today you would lose (13.00) from holding Infomedia or give up 8.12% of portfolio value over 90 days.

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

Charter Hall Education  vs.  Infomedia

Charter Hall Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Infomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infomedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Infomedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Charter Hall and Infomedia

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

The idea behind Charter Hall Education and Infomedia 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 Valuation module to check real value of public entities based on technical and fundamental data.