Correlation Between BTC Health and Charter Hall

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

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

Diversification Opportunities for BTC Health and Charter Hall

0.11

Correlation Coefficient

BTC Health  Charter Hall

Average diversification

The 3 months correlation between BTC and Charter is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BTC Health Limited 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 BTC Health 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 BTC Health Limited 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 BTC Health i.e., BTC Health and Charter Hall go up and down completely randomly.

Pair Corralation between BTC Health and Charter Hall

Assuming the 90 days trading horizon BTC Health Limited is expected to generate 4.0 times more return on investment than Charter Hall. However, BTC Health is 4.0 times more volatile than Charter Hall Retail. It trades about 0.12 of its potential returns per unit of risk. Charter Hall Retail is currently generating about -0.17 per unit of risk. If you would invest  5.00  in BTC Health Limited on September 20, 2024 and sell it today you would earn a total of  1.50  from holding BTC Health Limited or generate 30.0% return on investment over 90 days.

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

BTC Health Limited  vs.  Charter Hall Retail

BTC Health Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Health Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, BTC Health 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 BTC Health and Charter Hall

The main advantage of trading using opposite BTC Health and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTC Health 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 BTC Health Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.