Correlation Between Challenger and Fisher Paykel
Can any of the company-specific risk be diversified away by investing in both Challenger 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 Challenger and Fisher Paykel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Challenger and Fisher Paykel Healthcare, you can compare the effects of market volatilities on Challenger 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 Challenger with a short position of Fisher Paykel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Challenger and Fisher Paykel.
Diversification Opportunities for Challenger and Fisher Paykel
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Challenger and Fisher is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Challenger 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 Challenger 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 Challenger 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 Challenger i.e., Challenger and Fisher Paykel go up and down completely randomly.
Pair Corralation between Challenger and Fisher Paykel
Assuming the 90 days trading horizon Challenger is expected to generate 4.01 times less return on investment than Fisher Paykel. In addition to that, Challenger is 1.02 times more volatile than Fisher Paykel Healthcare. It trades about 0.02 of its total potential returns per unit of risk. Fisher Paykel Healthcare is currently generating about 0.09 per unit of volatility. If you would invest 2,124 in Fisher Paykel Healthcare on September 2, 2024 and sell it today you would earn a total of 1,328 from holding Fisher Paykel Healthcare or generate 62.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Challenger vs. Fisher Paykel Healthcare
Performance |
| Timeline |
| Challenger |
| Fisher Paykel Healthcare |
Challenger and Fisher Paykel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Challenger and Fisher Paykel
The main advantage of trading using opposite Challenger and Fisher Paykel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Challenger 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.| Challenger vs. RLF AgTech | Challenger vs. Ainsworth Game Technology | Challenger vs. Advanced Braking Technology | Challenger vs. Sandon Capital Investments |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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