Correlation Between Charter Hall and RLF AgTech

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

Diversification Opportunities for Charter Hall and RLF AgTech

0.77

Correlation Coefficient

Charter Hall  RLF AgTech

Poor diversification

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

Pair Corralation between Charter Hall and RLF AgTech

Assuming the 90 days trading horizon Charter Hall is expected to generate 7.65 times less return on investment than RLF AgTech. But when comparing it to its historical volatility, Charter Hall Retail is 6.45 times less risky than RLF AgTech. It trades about 0.18 of its potential returns per unit of risk. RLF AgTech is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2.90  in RLF AgTech on December 29, 2024 and sell it today you would earn a total of  3.30  from holding RLF AgTech or generate 113.79% 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.  RLF AgTech

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.

RLF AgTech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RLF AgTech are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, RLF AgTech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Hall and RLF AgTech

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

The idea behind Charter Hall Retail and RLF AgTech 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.