Correlation Between Charter Hall and Star Combo

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

Diversification Opportunities for Charter Hall and Star Combo

0.59

Correlation Coefficient

Charter Hall  Star Combo

Very weak diversification

The 3 months correlation between Charter and Star is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Star Combo Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Combo Pharma 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 Star Combo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Combo Pharma has no effect on the direction of Charter Hall i.e., Charter Hall and Star Combo go up and down completely randomly.

Pair Corralation between Charter Hall and Star Combo

Assuming the 90 days trading horizon Charter Hall is expected to generate 2.46 times less return on investment than Star Combo. But when comparing it to its historical volatility, Charter Hall Retail is 6.59 times less risky than Star Combo. It trades about 0.17 of its potential returns per unit of risk. Star Combo Pharma is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Star Combo Pharma on December 22, 2024 and sell it today you would earn a total of  2.00  from holding Star Combo Pharma or generate 14.29% return on investment over 90 days.

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

Charter Hall Retail  vs.  Star Combo Pharma

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 13 (%) 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.

Star Combo Pharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Star Combo Pharma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Star Combo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Hall and Star Combo

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

The idea behind Charter Hall Retail and Star Combo Pharma 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.