Correlation Between Ironbark Capital and Charter Hall

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

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

Diversification Opportunities for Ironbark Capital and Charter Hall

-0.29

Correlation Coefficient

Ironbark Capital  Charter Hall

Very good diversification

The 3 months correlation between Ironbark and Charter is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital 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 Ironbark Capital 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 Ironbark Capital 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 Ironbark Capital i.e., Ironbark Capital and Charter Hall go up and down completely randomly.

Pair Corralation between Ironbark Capital and Charter Hall

Assuming the 90 days trading horizon Ironbark Capital is expected to generate 0.8 times more return on investment than Charter Hall. However, Ironbark Capital is 1.25 times less risky than Charter Hall. It trades about 0.03 of its potential returns per unit of risk. Charter Hall Education is currently generating about 0.01 per unit of risk. If you would invest  43.00  in Ironbark Capital on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Ironbark Capital or generate 6.98% return on investment over 90 days.

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

Ironbark Capital  vs.  Charter Hall Education

Ironbark Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ironbark Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ironbark Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 comparatively stable technical and fundamental indicators, Charter Hall is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ironbark Capital and Charter Hall

The main advantage of trading using opposite Ironbark Capital and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironbark Capital 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 Ironbark Capital 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .