Correlation Between Altice USA and Charter Communications

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

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

Diversification Opportunities for Altice USA and Charter Communications

0.25

Correlation Coefficient

Altice USA  Charter Communications

Modest diversification

The 3 months correlation between Altice and Charter is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Altice USA and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Altice USA 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 Altice USA are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Altice USA i.e., Altice USA and Charter Communications go up and down completely randomly.

Pair Corralation between Altice USA and Charter Communications

Given the investment horizon of 90 days Altice USA is expected to under-perform the Charter Communications. In addition to that, Altice USA is 2.04 times more volatile than Charter Communications. It trades about -0.4 of its total potential returns per unit of risk. Charter Communications is currently generating about -0.27 per unit of volatility. If you would invest  29,060  in Charter Communications on January 25, 2024 and sell it today you would lose (2,429) from holding Charter Communications or give up 8.36% of portfolio value over 90 days.

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

Altice USA  vs.  Charter Communications

Altice USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altice USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Charter Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Altice USA and Charter Communications

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

The idea behind Altice USA and Charter Communications 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.