Correlation Between Charter Hall and MFF Capital

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

Diversification Opportunities for Charter Hall and MFF Capital

-0.81

Correlation Coefficient

Charter Hall  MFF Capital

Pay attention - limited upside

The 3 months correlation between Charter and MFF is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital 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 MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Charter Hall i.e., Charter Hall and MFF Capital go up and down completely randomly.

Pair Corralation between Charter Hall and MFF Capital

Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the MFF Capital. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 1.34 times less risky than MFF Capital. The stock trades about -0.2 of its potential returns per unit of risk. The MFF Capital Investments is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  428.00  in MFF Capital Investments on September 15, 2024 and sell it today you would earn a total of  33.00  from holding MFF Capital Investments or generate 7.71% return on investment over 90 days.

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

Charter Hall Retail  vs.  MFF Capital Investments

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.

MFF Capital Investments

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Hall and MFF Capital

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

The idea behind Charter Hall Retail and MFF Capital 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.