Correlation Between Fisher Paykel and G8 Education
Can any of the company-specific risk be diversified away by investing in both Fisher Paykel and G8 Education 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 Fisher Paykel and G8 Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fisher Paykel Healthcare and G8 Education, you can compare the effects of market volatilities on Fisher Paykel and G8 Education 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 Fisher Paykel with a short position of G8 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisher Paykel and G8 Education.
Diversification Opportunities for Fisher Paykel and G8 Education
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fisher and GEM is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fisher Paykel Healthcare and G8 Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 Education and Fisher Paykel 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 Fisher Paykel Healthcare are associated (or correlated) with G8 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 Education has no effect on the direction of Fisher Paykel i.e., Fisher Paykel and G8 Education go up and down completely randomly.
Pair Corralation between Fisher Paykel and G8 Education
Assuming the 90 days trading horizon Fisher Paykel Healthcare is expected to generate 0.97 times more return on investment than G8 Education. However, Fisher Paykel Healthcare is 1.03 times less risky than G8 Education. It trades about 0.12 of its potential returns per unit of risk. G8 Education is currently generating about 0.08 per unit of risk. If you would invest 2,239 in Fisher Paykel Healthcare on August 29, 2024 and sell it today you would earn a total of 1,164 from holding Fisher Paykel Healthcare or generate 51.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fisher Paykel Healthcare vs. G8 Education
Performance |
| Timeline |
| Fisher Paykel Healthcare |
| G8 Education |
Fisher Paykel and G8 Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fisher Paykel and G8 Education
The main advantage of trading using opposite Fisher Paykel and G8 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisher Paykel position performs unexpectedly, G8 Education 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 G8 Education will offset losses from the drop in G8 Education's long position.| Fisher Paykel vs. Summit Resources Limited | Fisher Paykel vs. Champion Iron | Fisher Paykel vs. Ridley | Fisher Paykel vs. Peel Mining |
| G8 Education vs. Summit Resources Limited | G8 Education vs. Champion Iron | G8 Education vs. Ridley | G8 Education vs. Peel Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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