Correlation Between Metro Mining and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Metro Mining 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 Metro Mining and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Charter Hall Retail, you can compare the effects of market volatilities on Metro Mining 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 Metro Mining with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Charter Hall.
Diversification Opportunities for Metro Mining and Charter Hall
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and Charter is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining 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 Metro Mining 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 Metro Mining 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 Metro Mining i.e., Metro Mining and Charter Hall go up and down completely randomly.
Pair Corralation between Metro Mining and Charter Hall
Assuming the 90 days trading horizon Metro Mining is expected to generate 10.65 times less return on investment than Charter Hall. In addition to that, Metro Mining is 3.41 times more volatile than Charter Hall Retail. It trades about 0.01 of its total potential returns per unit of risk. Charter Hall Retail is currently generating about 0.18 per unit of volatility. If you would invest 318.00 in Charter Hall Retail on December 29, 2024 and sell it today you would earn a total of 38.00 from holding Charter Hall Retail or generate 11.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Metro Mining vs. Charter Hall Retail
Performance |
Timeline |
Metro Mining |
Charter Hall Retail |
Metro Mining and Charter Hall Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metro Mining and Charter Hall
The main advantage of trading using opposite Metro Mining and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining 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.Metro Mining vs. Ironbark Capital | Metro Mining vs. Liberty Financial Group | Metro Mining vs. Qbe Insurance Group | Metro Mining vs. Iron Road |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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