Correlation Between Global Data and Charter Hall

Can any of the company-specific risk be diversified away by investing in both Global Data and Charter Hall 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 Global Data and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Data Centre and Charter Hall Retail, you can compare the effects of market volatilities on Global Data and Charter Hall 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 Global Data with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Data and Charter Hall.

Diversification Opportunities for Global Data and Charter Hall

0.65

Correlation Coefficient

Global Data  Charter Hall

Poor diversification

The 3 months correlation between Global and Charter is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global Data Centre and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail and Global Data 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 Global Data Centre are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Retail has no effect on the direction of Global Data i.e., Global Data and Charter Hall go up and down completely randomly.

Pair Corralation between Global Data and Charter Hall

Assuming the 90 days trading horizon Global Data Centre is expected to generate 2.86 times more return on investment than Charter Hall. However, Global Data is 2.86 times more volatile than Charter Hall Retail. It trades about 0.05 of its potential returns per unit of risk. Charter Hall Retail is currently generating about -0.01 per unit of risk. If you would invest  77.00  in Global Data Centre on September 19, 2024 and sell it today you would earn a total of  66.00  from holding Global Data Centre or generate 85.71% return on investment over 90 days.

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

Global Data Centre  vs.  Charter Hall Retail

Global Data Centre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Data Centre 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 fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Global Data and Charter Hall

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

The idea behind Global Data Centre and Charter Hall Retail 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..