Correlation Between Centuria Industrial and Charter Hall

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

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

Diversification Opportunities for Centuria Industrial and Charter Hall

0.92

Correlation Coefficient

Centuria Industrial  Charter Hall

Almost no diversification

The 3 months correlation between Centuria and Charter is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit 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 Centuria Industrial 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 Centuria Industrial Reit 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 Centuria Industrial i.e., Centuria Industrial and Charter Hall go up and down completely randomly.

Pair Corralation between Centuria Industrial and Charter Hall

Assuming the 90 days trading horizon Centuria Industrial Reit is expected to generate 0.79 times more return on investment than Charter Hall. However, Centuria Industrial Reit is 1.27 times less risky than Charter Hall. It trades about -0.22 of its potential returns per unit of risk. Charter Hall Retail is currently generating about -0.18 per unit of risk. If you would invest  323.00  in Centuria Industrial Reit on September 14, 2024 and sell it today you would lose (36.00) from holding Centuria Industrial Reit or give up 11.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Centuria Industrial Reit  vs.  Charter Hall Retail

Centuria Industrial Reit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centuria Industrial Reit 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.

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 Centuria Industrial and Charter Hall

The main advantage of trading using opposite Centuria Industrial and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centuria Industrial 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 Centuria Industrial Reit 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.