Correlation Between Charter Communications and Schweiter Technologies

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

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

Diversification Opportunities for Charter Communications and Schweiter Technologies

0.25

Correlation Coefficient

Charter Communications  Schweiter Technologies

Modest diversification

The 3 months correlation between Charter and Schweiter is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Charter Communications i.e., Charter Communications and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Charter Communications and Schweiter Technologies

Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 1.01 times more return on investment than Schweiter Technologies. However, Charter Communications is 1.01 times more volatile than Schweiter Technologies AG. It trades about 0.09 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.01 per unit of risk. If you would invest  34,672  in Charter Communications Cl on September 2, 2024 and sell it today you would earn a total of  4,723  from holding Charter Communications Cl or generate 13.62% return on investment over 90 days.

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

Charter Communications Cl  vs.  Schweiter Technologies AG

Charter Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 7 (%) 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.

Schweiter Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Charter Communications and Schweiter Technologies

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

The idea behind Charter Communications Cl and Schweiter Technologies AG 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.