Correlation Between Charter Hall and Centuria Industrial

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

Diversification Opportunities for Charter Hall and Centuria Industrial

0.77

Correlation Coefficient

Charter Hall  Centuria Industrial

Poor diversification

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

Pair Corralation between Charter Hall and Centuria Industrial

Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 0.94 times more return on investment than Centuria Industrial. However, Charter Hall Retail is 1.07 times less risky than Centuria Industrial. It trades about 0.17 of its potential returns per unit of risk. Centuria Industrial Reit is currently generating about 0.05 per unit of risk. If you would invest  318.00  in Charter Hall Retail on December 28, 2024 and sell it today you would earn a total of  35.00  from holding Charter Hall Retail or generate 11.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Charter Hall Retail  vs.  Centuria Industrial Reit

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 13 (%) 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.

Centuria Industrial Reit

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centuria Industrial Reit are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Centuria Industrial 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 Centuria Industrial

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

The idea behind Charter Hall Retail and Centuria Industrial Reit 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.