Correlation Between Charter Hall and Tabcorp Holdings

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

Diversification Opportunities for Charter Hall and Tabcorp Holdings

-0.77

Correlation Coefficient

Charter Hall  Tabcorp Holdings

Pay attention - limited upside

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

Pair Corralation between Charter Hall and Tabcorp Holdings

Assuming the 90 days trading horizon Charter Hall is expected to generate 1.95 times less return on investment than Tabcorp Holdings. But when comparing it to its historical volatility, Charter Hall Retail is 2.99 times less risky than Tabcorp Holdings. It trades about 0.21 of its potential returns per unit of risk. Tabcorp Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Tabcorp Holdings on October 8, 2024 and sell it today you would earn a total of  3.00  from holding Tabcorp Holdings or generate 5.36% return on investment over 90 days.

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

Charter Hall Retail  vs.  Tabcorp Holdings

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 comparatively stable basic indicators, Charter Hall is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tabcorp Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tabcorp Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Tabcorp Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Hall and Tabcorp Holdings

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

The idea behind Charter Hall Retail and Tabcorp Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.