Correlation Between FSA and Austco Healthcare
Can any of the company-specific risk be diversified away by investing in both FSA and Austco Healthcare 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 FSA and Austco Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and Austco Healthcare, you can compare the effects of market volatilities on FSA and Austco Healthcare 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 FSA with a short position of Austco Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and Austco Healthcare.
Diversification Opportunities for FSA and Austco Healthcare
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FSA and Austco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare and FSA 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 FSA Group are associated (or correlated) with Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of FSA i.e., FSA and Austco Healthcare go up and down completely randomly.
Pair Corralation between FSA and Austco Healthcare
Assuming the 90 days trading horizon FSA Group is expected to under-perform the Austco Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, FSA Group is 2.17 times less risky than Austco Healthcare. The stock trades about -0.02 of its potential returns per unit of risk. The Austco Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Austco Healthcare on August 25, 2024 and sell it today you would earn a total of 4.00 from holding Austco Healthcare or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FSA Group vs. Austco Healthcare
Performance |
| Timeline |
| FSA Group |
| Austco Healthcare |
FSA and Austco Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and Austco Healthcare
The main advantage of trading using opposite FSA and Austco Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA position performs unexpectedly, Austco Healthcare 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 Austco Healthcare will offset losses from the drop in Austco Healthcare's long position.The idea behind FSA Group and Austco Healthcare 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.| Austco Healthcare vs. FSA Group | Austco Healthcare vs. Tamawood | Austco Healthcare vs. Cochlear | Austco Healthcare vs. Rea Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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