Correlation Between Carindale Property and Charter Hall

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

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

Diversification Opportunities for Carindale Property and Charter Hall

-0.39

Correlation Coefficient

Carindale Property  Charter Hall

Very good diversification

The 3 months correlation between Carindale and Charter is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Carindale Property Trust and Charter Hall Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Education and Carindale Property 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 Carindale Property Trust 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 Education has no effect on the direction of Carindale Property i.e., Carindale Property and Charter Hall go up and down completely randomly.

Pair Corralation between Carindale Property and Charter Hall

Assuming the 90 days trading horizon Carindale Property Trust is expected to generate 0.93 times more return on investment than Charter Hall. However, Carindale Property Trust is 1.07 times less risky than Charter Hall. It trades about 0.08 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.08 per unit of risk. If you would invest  442.00  in Carindale Property Trust on September 12, 2024 and sell it today you would earn a total of  28.00  from holding Carindale Property Trust or generate 6.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Carindale Property Trust  vs.  Charter Hall Education

Carindale Property Trust

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carindale Property Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Carindale Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Charter Hall Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental 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 Carindale Property and Charter Hall

The main advantage of trading using opposite Carindale Property and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carindale Property 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 Carindale Property Trust and Charter Hall Education 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.