Correlation Between Charter Hall and GDI Property

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

Diversification Opportunities for Charter Hall and GDI Property

0.63

Correlation Coefficient

Charter Hall  GDI Property

Poor diversification

The 3 months correlation between Charter and GDI is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and GDI Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Property Group 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 GDI Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Property Group has no effect on the direction of Charter Hall i.e., Charter Hall and GDI Property go up and down completely randomly.

Pair Corralation between Charter Hall and GDI Property

Assuming the 90 days trading horizon Charter Hall is expected to generate 1.2 times less return on investment than GDI Property. But when comparing it to its historical volatility, Charter Hall Retail is 1.64 times less risky than GDI Property. It trades about 0.18 of its potential returns per unit of risk. GDI Property Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  57.00  in GDI Property Group on December 29, 2024 and sell it today you would earn a total of  8.00  from holding GDI Property Group or generate 14.04% 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.  GDI Property Group

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.

GDI Property Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Property Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, GDI Property unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Hall and GDI Property

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

The idea behind Charter Hall Retail and GDI Property Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.