Correlation Between Australian Agricultural and Fisher Paykel
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Fisher Paykel 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 Australian Agricultural and Fisher Paykel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Fisher Paykel Healthcare, you can compare the effects of market volatilities on Australian Agricultural and Fisher Paykel 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 Australian Agricultural with a short position of Fisher Paykel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Fisher Paykel.
Diversification Opportunities for Australian Agricultural and Fisher Paykel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Fisher is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Fisher Paykel Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Paykel Healthcare and Australian Agricultural 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 Australian Agricultural are associated (or correlated) with Fisher Paykel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Paykel Healthcare has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Fisher Paykel go up and down completely randomly.
Pair Corralation between Australian Agricultural and Fisher Paykel
Assuming the 90 days trading horizon Australian Agricultural is expected to under-perform the Fisher Paykel. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.31 times less risky than Fisher Paykel. The stock trades about -0.11 of its potential returns per unit of risk. The Fisher Paykel Healthcare is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,269 in Fisher Paykel Healthcare on August 31, 2024 and sell it today you would earn a total of 183.00 from holding Fisher Paykel Healthcare or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Fisher Paykel Healthcare
Performance |
| Timeline |
| Australian Agricultural |
| Fisher Paykel Healthcare |
Australian Agricultural and Fisher Paykel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Fisher Paykel
The main advantage of trading using opposite Australian Agricultural and Fisher Paykel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Fisher Paykel 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 Fisher Paykel will offset losses from the drop in Fisher Paykel's long position.| Australian Agricultural vs. Retail Food Group | Australian Agricultural vs. Spirit Telecom | Australian Agricultural vs. Credit Clear | Australian Agricultural vs. Wt Financial Group |
| Fisher Paykel vs. Home Consortium | Fisher Paykel vs. Pinnacle Investment Management | Fisher Paykel vs. Land Homes Group | Fisher Paykel vs. Hutchison Telecommunications |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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