Correlation Between Charter Hall and DY6 Metals

Can any of the company-specific risk be diversified away by investing in both Charter Hall and DY6 Metals 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 DY6 Metals 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 DY6 Metals, you can compare the effects of market volatilities on Charter Hall and DY6 Metals 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 DY6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and DY6 Metals.

Diversification Opportunities for Charter Hall and DY6 Metals

0.0

Correlation Coefficient

Charter Hall  DY6 Metals

Pay attention - limited upside

The 3 months correlation between Charter and DY6 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and DY6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DY6 Metals 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 DY6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DY6 Metals has no effect on the direction of Charter Hall i.e., Charter Hall and DY6 Metals go up and down completely randomly.

Pair Corralation between Charter Hall and DY6 Metals

Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the DY6 Metals. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 3.92 times less risky than DY6 Metals. The stock trades about -0.18 of its potential returns per unit of risk. The DY6 Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5.00  in DY6 Metals on September 13, 2024 and sell it today you would lose (0.20) from holding DY6 Metals or give up 4.0% of portfolio value over 90 days.

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

Charter Hall Retail  vs.  DY6 Metals

Charter Hall Retail

Risk-Adjusted Performance

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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.

DY6 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DY6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DY6 Metals 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 DY6 Metals

The main advantage of trading using opposite Charter Hall and DY6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, DY6 Metals 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 DY6 Metals will offset losses from the drop in DY6 Metals' long position.

The idea behind Charter Hall Retail and DY6 Metals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.