Correlation Between Charter Hall and Stelar Metals

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

Diversification Opportunities for Charter Hall and Stelar Metals

-0.5

Correlation Coefficient

Charter Hall  Stelar Metals

Very good diversification

The 3 months correlation between Charter and Stelar is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Charter Hall i.e., Charter Hall and Stelar Metals go up and down completely randomly.

Pair Corralation between Charter Hall and Stelar Metals

Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 0.43 times more return on investment than Stelar Metals. However, Charter Hall Retail is 2.35 times less risky than Stelar Metals. It trades about 0.18 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.05 per unit of risk. If you would invest  318.00  in Charter Hall Retail on December 29, 2024 and sell it today you would earn a total of  38.00  from holding Charter Hall Retail or generate 11.95% return on investment over 90 days.

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

Charter Hall Retail  vs.  Stelar Metals

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.

Stelar Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stelar Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Charter Hall and Stelar Metals

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

The idea behind Charter Hall Retail and Stelar 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.