Correlation Between Charter Hall and Tombador Iron

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

Diversification Opportunities for Charter Hall and Tombador Iron

0.0

Correlation Coefficient

Charter Hall  Tombador Iron

Pay attention - limited upside

The 3 months correlation between Charter and Tombador is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Tombador Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tombador Iron 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 Tombador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tombador Iron has no effect on the direction of Charter Hall i.e., Charter Hall and Tombador Iron go up and down completely randomly.

Pair Corralation between Charter Hall and Tombador Iron

If you would invest  258.00  in Charter Hall Education on December 30, 2024 and sell it today you would earn a total of  21.00  from holding Charter Hall Education or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Charter Hall Education  vs.  Tombador Iron

Charter Hall Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Hall Education are ranked lower than 6 (%) 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 April 2025.

Tombador Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tombador Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tombador Iron 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 Tombador Iron

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

The idea behind Charter Hall Education and Tombador Iron 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.