Correlation Between Vicinity Centres and Charter Hall

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

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

Diversification Opportunities for Vicinity Centres and Charter Hall

0.68

Correlation Coefficient

Vicinity Centres  Charter Hall

Poor diversification

The 3 months correlation between Vicinity and Charter is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres Re and Charter Hall Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Long and Vicinity Centres 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 Vicinity Centres Re 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 Long has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and Charter Hall go up and down completely randomly.

Pair Corralation between Vicinity Centres and Charter Hall

Assuming the 90 days trading horizon Vicinity Centres Re is expected to generate 0.96 times more return on investment than Charter Hall. However, Vicinity Centres Re is 1.05 times less risky than Charter Hall. It trades about 0.03 of its potential returns per unit of risk. Charter Hall Long is currently generating about 0.0 per unit of risk. If you would invest  176.00  in Vicinity Centres Re on September 14, 2024 and sell it today you would earn a total of  29.00  from holding Vicinity Centres Re or generate 16.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Vicinity Centres Re  vs.  Charter Hall Long

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Centres Re 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 Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Hall Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic 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 Vicinity Centres and Charter Hall

The main advantage of trading using opposite Vicinity Centres and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity Centres 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 Vicinity Centres Re and Charter Hall Long 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.