Correlation Between FSA and Cochlear
Can any of the company-specific risk be diversified away by investing in both FSA 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 FSA and Cochlear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FSA Group and Cochlear, you can compare the effects of market volatilities on FSA 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 FSA with a short position of Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of FSA and Cochlear.
Diversification Opportunities for FSA and Cochlear
Good diversification
The 3 months correlation between FSA and Cochlear is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FSA Group and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear 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 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 FSA i.e., FSA and Cochlear go up and down completely randomly.
Pair Corralation between FSA and Cochlear
Assuming the 90 days trading horizon FSA Group is expected to under-perform the Cochlear. But the stock apears to be less risky and, when comparing its historical volatility, FSA Group is 1.09 times less risky than Cochlear. The stock trades about -0.03 of its potential returns per unit of risk. The Cochlear is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 30,083 in Cochlear on August 29, 2024 and sell it today you would earn a total of 545.00 from holding Cochlear or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
FSA Group vs. Cochlear
Performance |
| Timeline |
| FSA Group |
| Cochlear |
FSA and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FSA and Cochlear
The main advantage of trading using opposite FSA and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FSA 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.| FSA vs. MFF Capital Investments | FSA vs. REGAL ASIAN INVESTMENTS | FSA vs. Stelar Metals | FSA vs. Sky Metals |
| Cochlear vs. Hawsons Iron | Cochlear vs. Beston Global Food | Cochlear vs. Queste Communications | Cochlear vs. Charter Hall Education |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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