Correlation Between MFF Capital and Charter Hall

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

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

Diversification Opportunities for MFF Capital and Charter Hall

-0.81

Correlation Coefficient

MFF Capital  Charter Hall

Pay attention - limited upside

The 3 months correlation between MFF and Charter is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments 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 MFF Capital 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 MFF Capital Investments 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 MFF Capital i.e., MFF Capital and Charter Hall go up and down completely randomly.

Pair Corralation between MFF Capital and Charter Hall

Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 1.05 times more return on investment than Charter Hall. However, MFF Capital is 1.05 times more volatile than Charter Hall Retail. It trades about 0.17 of its potential returns per unit of risk. Charter Hall Retail is currently generating about 0.03 per unit of risk. If you would invest  351.00  in MFF Capital Investments on September 15, 2024 and sell it today you would earn a total of  110.00  from holding MFF Capital Investments or generate 31.34% return on investment over 90 days.

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

MFF Capital Investments  vs.  Charter Hall Retail

MFF Capital Investments

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 MFF Capital and Charter Hall

The main advantage of trading using opposite MFF Capital and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital 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 MFF Capital Investments 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.