Correlation Between Charter Hall and Zenith Minerals

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

Diversification Opportunities for Charter Hall and Zenith Minerals

0.45

Correlation Coefficient

Charter Hall  Zenith Minerals

Very weak diversification

The 3 months correlation between Charter and Zenith is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Zenith Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenith Minerals 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 Zenith Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenith Minerals has no effect on the direction of Charter Hall i.e., Charter Hall and Zenith Minerals go up and down completely randomly.

Pair Corralation between Charter Hall and Zenith Minerals

Assuming the 90 days trading horizon Charter Hall is expected to generate 6.73 times less return on investment than Zenith Minerals. But when comparing it to its historical volatility, Charter Hall Retail is 5.2 times less risky than Zenith Minerals. It trades about 0.0 of its potential returns per unit of risk. Zenith Minerals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8.50  in Zenith Minerals on October 4, 2024 and sell it today you would lose (4.50) from holding Zenith Minerals or give up 52.94% of portfolio value over 90 days.

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

Charter Hall Retail  vs.  Zenith Minerals

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Zenith Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Charter Hall Retail and Zenith Minerals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.