Correlation Between Charter Communications and China Pacific

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

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

Diversification Opportunities for Charter Communications and China Pacific

-0.09

Correlation Coefficient

Charter Communications  China Pacific

Good diversification

The 3 months correlation between Charter and China is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance 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 Cl are associated (or correlated) with China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of Charter Communications i.e., Charter Communications and China Pacific go up and down completely randomly.

Pair Corralation between Charter Communications and China Pacific

Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 5.1 times more return on investment than China Pacific. However, Charter Communications is 5.1 times more volatile than China Pacific Insurance. It trades about 0.14 of its potential returns per unit of risk. China Pacific Insurance is currently generating about -0.13 per unit of risk. If you would invest  33,742  in Charter Communications Cl on April 23, 2025 and sell it today you would earn a total of  6,124  from holding Charter Communications Cl or generate 18.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Charter Communications Cl  vs.  China Pacific Insurance

Charter Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 10 (%) 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.

China Pacific Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Pacific Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, China Pacific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Charter Communications and China Pacific

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

The idea behind Charter Communications Cl and China Pacific Insurance 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.