Correlation Between Longfor Group and Charter Communications

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

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

Diversification Opportunities for Longfor Group and Charter Communications

0.0

Correlation Coefficient

Longfor Group  Charter Communications

Pay attention - limited upside

The 3 months correlation between Longfor and Charter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Group Holdings and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Longfor Group 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 Longfor Group Holdings 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 Longfor Group i.e., Longfor Group and Charter Communications go up and down completely randomly.

Pair Corralation between Longfor Group and Charter Communications

If you would invest  0.00  in Longfor Group Holdings on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Longfor Group Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.7%
Values	Daily Returns

Longfor Group Holdings  vs.  Charter Communications

Longfor Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Charter Communications

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Longfor Group and Charter Communications

The main advantage of trading using opposite Longfor Group and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Group 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 Longfor Group Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.