Correlation Between Charter Hall and Kip McGrath

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

By analyzing existing cross correlation between Charter Hall Retail and Kip McGrath Education, you can compare the effects of market volatilities on Charter Hall and Kip McGrath 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 Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Kip McGrath.

Diversification Opportunities for Charter Hall and Kip McGrath

-0.55

Correlation Coefficient

Charter Hall  Kip McGrath

Excellent diversification

The 3 months correlation between Charter and Kip is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education 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 Retail are associated (or correlated) with Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Charter Hall i.e., Charter Hall and Kip McGrath go up and down completely randomly.

Pair Corralation between Charter Hall and Kip McGrath

Assuming the 90 days trading horizon Charter Hall is expected to generate 1.04 times less return on investment than Kip McGrath. But when comparing it to its historical volatility, Charter Hall Retail is 2.87 times less risky than Kip McGrath. It trades about 0.04 of its potential returns per unit of risk. Kip McGrath Education is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Kip McGrath Education on September 24, 2024 and sell it today you would lose (2.00) from holding Kip McGrath Education or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Charter Hall Retail  vs.  Kip McGrath Education

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.

Kip McGrath Education

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kip McGrath Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Kip McGrath may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Charter Hall and Kip McGrath

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

The idea behind Charter Hall Retail and Kip McGrath 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.