Correlation Between Ibiden CoLtd and Charter Communications

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

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

Diversification Opportunities for Ibiden CoLtd and Charter Communications

-0.09

Correlation Coefficient

Ibiden CoLtd  Charter Communications

Good diversification

The 3 months correlation between Ibiden and Charter is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ibiden CoLtd and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Ibiden CoLtd 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 Ibiden CoLtd are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Ibiden CoLtd i.e., Ibiden CoLtd and Charter Communications go up and down completely randomly.

Pair Corralation between Ibiden CoLtd and Charter Communications

Assuming the 90 days horizon Ibiden CoLtd is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, Ibiden CoLtd is 1.14 times less risky than Charter Communications. The stock trades about -0.24 of its potential returns per unit of risk. The Charter Communications is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  37,380  in Charter Communications on September 23, 2024 and sell it today you would lose (3,565) from holding Charter Communications or give up 9.54% of portfolio value over 90 days.

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

Ibiden CoLtd  vs.  Charter Communications

Ibiden CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibiden CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ibiden CoLtd is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Charter Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ibiden CoLtd and Charter Communications

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

The idea behind Ibiden CoLtd and Charter Communications 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.