Correlation Between Charter Hall and Vicinity Centres

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

Diversification Opportunities for Charter Hall and Vicinity Centres

0.91

Correlation Coefficient

Charter Hall  Vicinity Centres

Almost no diversification

The 3 months correlation between Charter and Vicinity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Vicinity Centres Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Charter Hall i.e., Charter Hall and Vicinity Centres go up and down completely randomly.

Pair Corralation between Charter Hall and Vicinity Centres

Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Vicinity Centres. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 1.18 times less risky than Vicinity Centres. The stock trades about -0.09 of its potential returns per unit of risk. The Vicinity Centres Re is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Vicinity Centres Re on September 5, 2024 and sell it today you would lose (10.00) from holding Vicinity Centres Re or give up 4.39% of portfolio value over 90 days.

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

Charter Hall Retail  vs.  Vicinity Centres Re

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.

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Centres Re has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vicinity Centres is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Charter Hall and Vicinity Centres

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

The idea behind Charter Hall Retail and Vicinity Centres Re 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.