Correlation Between Charter Hall and Carlton Investments

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

Diversification Opportunities for Charter Hall and Carlton Investments

0.77

Correlation Coefficient

Charter Hall  Carlton Investments

Poor diversification

The 3 months correlation between Charter and Carlton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments 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 Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Charter Hall i.e., Charter Hall and Carlton Investments go up and down completely randomly.

Pair Corralation between Charter Hall and Carlton Investments

Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 1.04 times more return on investment than Carlton Investments. However, Charter Hall is 1.04 times more volatile than Carlton Investments. It trades about 0.18 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.09 per unit of risk. If you would invest  318.00  in Charter Hall Retail on December 30, 2024 and sell it today you would earn a total of  38.00  from holding Charter Hall Retail or generate 11.95% return on investment over 90 days.

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

Charter Hall Retail  vs.  Carlton Investments

Charter Hall Retail

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Hall Retail are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Hall may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Carlton Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments 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 Carlton Investments

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

The idea behind Charter Hall Retail and Carlton Investments 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.