Correlation Between Charter Hall and Vulcan Steel

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

Diversification Opportunities for Charter Hall and Vulcan Steel

0.7

Correlation Coefficient

Charter Hall  Vulcan Steel

Poor diversification

The 3 months correlation between Charter and Vulcan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Vulcan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Steel 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 Vulcan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Steel has no effect on the direction of Charter Hall i.e., Charter Hall and Vulcan Steel go up and down completely randomly.

Pair Corralation between Charter Hall and Vulcan Steel

Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Vulcan Steel. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 2.19 times less risky than Vulcan Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Vulcan Steel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  731.00  in Vulcan Steel on October 9, 2024 and sell it today you would lose (4.00) from holding Vulcan Steel or give up 0.55% 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.  Vulcan Steel

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.

Vulcan Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vulcan Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators 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 Vulcan Steel

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

The idea behind Charter Hall Retail and Vulcan Steel 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.