Correlation Between Charter Communications and Oakley Capital

Can any of the company-specific risk be diversified away by investing in both Charter Communications and Oakley Capital 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 Oakley Capital 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 Oakley Capital Investments, you can compare the effects of market volatilities on Charter Communications and Oakley Capital 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 Oakley Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Oakley Capital.

Diversification Opportunities for Charter Communications and Oakley Capital

-0.55

Correlation Coefficient

Charter Communications  Oakley Capital

Excellent diversification

The 3 months correlation between Charter and Oakley is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of Charter Communications i.e., Charter Communications and Oakley Capital go up and down completely randomly.

Pair Corralation between Charter Communications and Oakley Capital

Assuming the 90 days trading horizon Charter Communications Cl is expected to under-perform the Oakley Capital. In addition to that, Charter Communications is 1.44 times more volatile than Oakley Capital Investments. It trades about -0.1 of its total potential returns per unit of risk. Oakley Capital Investments is currently generating about 0.03 per unit of volatility. If you would invest  49,900  in Oakley Capital Investments on September 19, 2024 and sell it today you would earn a total of  300.00  from holding Oakley Capital Investments or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Charter Communications Cl  vs.  Oakley Capital Investments

Charter Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oakley Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakley Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oakley Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Charter Communications and Oakley Capital

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

The idea behind Charter Communications Cl and Oakley Capital Investments 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.