Correlation Between Charter Communications and Jupiter Energy

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

By analyzing existing cross correlation between Charter Communications and Jupiter Energy Limited, you can compare the effects of market volatilities on Charter Communications and Jupiter Energy 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 Jupiter Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Jupiter Energy.

Diversification Opportunities for Charter Communications and Jupiter Energy

0.24

Correlation Coefficient

Charter Communications  Jupiter Energy

Modest diversification

The 3 months correlation between Charter and Jupiter is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Jupiter Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Energy 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 are associated (or correlated) with Jupiter Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Energy has no effect on the direction of Charter Communications i.e., Charter Communications and Jupiter Energy go up and down completely randomly.

Pair Corralation between Charter Communications and Jupiter Energy

Assuming the 90 days trading horizon Charter Communications is expected to generate 70.89 times less return on investment than Jupiter Energy. But when comparing it to its historical volatility, Charter Communications is 54.92 times less risky than Jupiter Energy. It trades about 0.14 of its potential returns per unit of risk. Jupiter Energy Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Jupiter Energy Limited on September 5, 2024 and sell it today you would earn a total of  0.45  from holding Jupiter Energy Limited or generate 150.0% 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  vs.  Jupiter Energy Limited

Charter Communications

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 11 (%) 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.

Jupiter Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter Energy Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Jupiter Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and Jupiter Energy

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

The idea behind Charter Communications and Jupiter Energy Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.