Correlation Between Finexia Financial and Cochlear
Can any of the company-specific risk be diversified away by investing in both Finexia Financial and Cochlear 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 Finexia Financial and Cochlear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finexia Financial Group and Cochlear, you can compare the effects of market volatilities on Finexia Financial and Cochlear 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 Finexia Financial with a short position of Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finexia Financial and Cochlear.
Diversification Opportunities for Finexia Financial and Cochlear
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finexia and Cochlear is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Finexia Financial Group and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear and Finexia Financial 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 Finexia Financial Group are associated (or correlated) with Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Finexia Financial i.e., Finexia Financial and Cochlear go up and down completely randomly.
Pair Corralation between Finexia Financial and Cochlear
Assuming the 90 days trading horizon Finexia Financial Group is expected to generate 3.39 times more return on investment than Cochlear. However, Finexia Financial is 3.39 times more volatile than Cochlear. It trades about 0.04 of its potential returns per unit of risk. Cochlear is currently generating about 0.06 per unit of risk. If you would invest 22.00 in Finexia Financial Group on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Finexia Financial Group or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finexia Financial Group vs. Cochlear
Performance |
| Timeline |
| Finexia Financial |
| Cochlear |
Finexia Financial and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finexia Financial and Cochlear
The main advantage of trading using opposite Finexia Financial and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finexia Financial position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| Finexia Financial vs. Energy Resources | Finexia Financial vs. 88 Energy | Finexia Financial vs. Amani Gold | Finexia Financial vs. A1 Investments Resources |
| Cochlear vs. Aurelia Metals | Cochlear vs. Alto Metals | Cochlear vs. Richmond Vanadium Technology | Cochlear vs. Centuria Industrial Reit |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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