Correlation Between Charter Hall and Global Data

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

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

Diversification Opportunities for Charter Hall and Global Data

0.63

Correlation Coefficient

Charter Hall  Global Data

Poor diversification

The 3 months correlation between Charter and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Global Data Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Data Centre and Charter Hall 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 Hall Education are associated (or correlated) with Global Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Data Centre has no effect on the direction of Charter Hall i.e., Charter Hall and Global Data go up and down completely randomly.

Pair Corralation between Charter Hall and Global Data

Assuming the 90 days trading horizon Charter Hall Education is expected to generate 0.21 times more return on investment than Global Data. However, Charter Hall Education is 4.86 times less risky than Global Data. It trades about -0.18 of its potential returns per unit of risk. Global Data Centre is currently generating about -0.11 per unit of risk. If you would invest  292.00  in Charter Hall Education on September 24, 2024 and sell it today you would lose (33.00) from holding Charter Hall Education or give up 11.3% of portfolio value over 90 days.

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

Charter Hall Education  vs.  Global Data Centre

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.

Global Data Centre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Data Centre has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Charter Hall and Global Data

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

The idea behind Charter Hall Education and Global Data Centre 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.