Correlation Between Austco Healthcare and Challenger

Can any of the company-specific risk be diversified away by investing in both Austco Healthcare and Challenger 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 Austco Healthcare and Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Austco Healthcare and Challenger, you can compare the effects of market volatilities on Austco Healthcare and Challenger 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 Austco Healthcare with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austco Healthcare and Challenger.

Diversification Opportunities for Austco Healthcare and Challenger

0.11

Correlation Coefficient

Austco Healthcare  Challenger

Average diversification

The 3 months correlation between Austco and Challenger is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Austco Healthcare and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and Austco Healthcare 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 Austco Healthcare are associated (or correlated) with Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Austco Healthcare i.e., Austco Healthcare and Challenger go up and down completely randomly.

Pair Corralation between Austco Healthcare and Challenger

Assuming the 90 days trading horizon Austco Healthcare is expected to generate 2.09 times more return on investment than Challenger. However, Austco Healthcare is 2.09 times more volatile than Challenger. It trades about 0.08 of its potential returns per unit of risk. Challenger is currently generating about -0.07 per unit of risk. If you would invest  22.00  in Austco Healthcare on September 13, 2024 and sell it today you would earn a total of  3.00  from holding Austco Healthcare or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Austco Healthcare  vs.  Challenger

Austco Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austco Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Austco Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Challenger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Challenger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Austco Healthcare and Challenger

The main advantage of trading using opposite Austco Healthcare and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austco Healthcare position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.

The idea behind Austco Healthcare and Challenger 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.