Correlation Between Charter Hall and Group 6

Can any of the company-specific risk be diversified away by investing in both Charter Hall and Group 6 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 Group 6 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 Group 6 Metals, you can compare the effects of market volatilities on Charter Hall and Group 6 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 Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Group 6.

Diversification Opportunities for Charter Hall and Group 6

-0.36

Correlation Coefficient

Charter Hall  Group 6

Very good diversification

The 3 months correlation between Charter and Group is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 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 Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of Charter Hall i.e., Charter Hall and Group 6 go up and down completely randomly.

Pair Corralation between Charter Hall and Group 6

Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Group 6. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 1.5 times less risky than Group 6. The stock trades about -0.18 of its potential returns per unit of risk. The Group 6 Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.35  in Group 6 Metals on September 13, 2024 and sell it today you would earn a total of  0.15  from holding Group 6 Metals or generate 6.38% return on investment over 90 days.

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

Charter Hall Retail  vs.  Group 6 Metals

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.

Group 6 Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Group 6 Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Group 6 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Charter Hall and Group 6

The main advantage of trading using opposite Charter Hall and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6's long position.

The idea behind Charter Hall Retail and Group 6 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.