Correlation Between Charter Communications and Hua Hong

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

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

Diversification Opportunities for Charter Communications and Hua Hong

-0.39

Correlation Coefficient

Charter Communications  Hua Hong

Very good diversification

The 3 months correlation between Charter and Hua is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor 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 are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Charter Communications i.e., Charter Communications and Hua Hong go up and down completely randomly.

Pair Corralation between Charter Communications and Hua Hong

Assuming the 90 days trading horizon Charter Communications is expected to generate 0.76 times more return on investment than Hua Hong. However, Charter Communications is 1.31 times less risky than Hua Hong. It trades about 0.1 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about -0.01 per unit of risk. If you would invest  29,515  in Charter Communications on April 24, 2025 and sell it today you would earn a total of  4,090  from holding Charter Communications or generate 13.86% return on investment over 90 days.

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

Charter Communications  vs.  Hua Hong Semiconductor

Charter Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hua Hong Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hua Hong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Charter Communications and Hua Hong

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

The idea behind Charter Communications and Hua Hong Semiconductor 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.