Correlation Between Charter Hall and Torque Metals

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

Diversification Opportunities for Charter Hall and Torque Metals

0.68

Correlation Coefficient

Charter Hall  Torque Metals

Poor diversification

The 3 months correlation between Charter and Torque is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Torque Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torque 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 Torque Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torque Metals has no effect on the direction of Charter Hall i.e., Charter Hall and Torque Metals go up and down completely randomly.

Pair Corralation between Charter Hall and Torque Metals

Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 0.21 times more return on investment than Torque Metals. However, Charter Hall Retail is 4.84 times less risky than Torque Metals. It trades about -0.1 of its potential returns per unit of risk. Torque Metals is currently generating about -0.1 per unit of risk. If you would invest  341.00  in Charter Hall Retail on October 6, 2024 and sell it today you would lose (21.00) from holding Charter Hall Retail or give up 6.16% of portfolio value over 90 days.

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

Charter Hall Retail  vs.  Torque Metals

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.

Torque Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Torque Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Charter Hall and Torque Metals

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

The idea behind Charter Hall Retail and Torque 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.