Correlation Between Insignia Financial and Charter Hall

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

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

Diversification Opportunities for Insignia Financial and Charter Hall

-0.48

Correlation Coefficient

Insignia Financial  Charter Hall

Very good diversification

The 3 months correlation between Insignia and Charter is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Charter Hall Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Education and Insignia Financial 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 Insignia Financial 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 Education has no effect on the direction of Insignia Financial i.e., Insignia Financial and Charter Hall go up and down completely randomly.

Pair Corralation between Insignia Financial and Charter Hall

Assuming the 90 days trading horizon Insignia Financial is expected to generate 1.58 times more return on investment than Charter Hall. However, Insignia Financial is 1.58 times more volatile than Charter Hall Education. It trades about 0.21 of its potential returns per unit of risk. Charter Hall Education is currently generating about 0.01 per unit of risk. If you would invest  238.00  in Insignia Financial on August 31, 2024 and sell it today you would earn a total of  75.00  from holding Insignia Financial or generate 31.51% return on investment over 90 days.

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

Insignia Financial  vs.  Charter Hall Education

Insignia Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Charter Hall Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental 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.

Pair Trading with Insignia Financial and Charter Hall

The main advantage of trading using opposite Insignia Financial and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial 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 Insignia Financial and Charter Hall Education 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.