Correlation Between Charter Hall and Carnegie Clean

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

By analyzing existing cross correlation between Charter Hall Retail and Carnegie Clean Energy, you can compare the effects of market volatilities on Charter Hall and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Carnegie Clean.

Diversification Opportunities for Charter Hall and Carnegie Clean

0.08

Correlation Coefficient

Charter Hall  Carnegie Clean

Significant diversification

The 3 months correlation between Charter and Carnegie is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Retail are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Charter Hall i.e., Charter Hall and Carnegie Clean go up and down completely randomly.

Pair Corralation between Charter Hall and Carnegie Clean

Assuming the 90 days trading horizon Charter Hall is expected to generate 1076.33 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, Charter Hall Retail is 16.51 times less risky than Carnegie Clean. It trades about 0.0 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Carnegie Clean Energy on October 4, 2024 and sell it today you would lose (3.90) from holding Carnegie Clean Energy or give up 52.0% of portfolio value over 90 days.

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

Charter Hall Retail  vs.  Carnegie Clean Energy

Charter Hall Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Carnegie Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Carnegie Clean 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 Carnegie Clean

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

The idea behind Charter Hall Retail and Carnegie Clean Energy 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.