Correlation Between CSL and Fisher Paykel

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

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

Diversification Opportunities for CSL and Fisher Paykel

0.06

Correlation Coefficient

CSL  Fisher Paykel

Significant diversification

The 3 months correlation between CSL and Fisher is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Fisher Paykel Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Paykel Healthcare and CSL 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 CSL are associated (or correlated) with Fisher Paykel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Paykel Healthcare has no effect on the direction of CSL i.e., CSL and Fisher Paykel go up and down completely randomly.

Pair Corralation between CSL and Fisher Paykel

Assuming the 90 days trading horizon CSL is expected to under-perform the Fisher Paykel. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 1.53 times less risky than Fisher Paykel. The stock trades about -0.1 of its potential returns per unit of risk. The Fisher Paykel Healthcare is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,547  in Fisher Paykel Healthcare on September 12, 2024 and sell it today you would lose (192.00) from holding Fisher Paykel Healthcare or give up 5.41% of portfolio value over 90 days.

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

CSL  vs.  Fisher Paykel Healthcare

CSL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fisher Paykel Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisher Paykel Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Fisher Paykel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CSL and Fisher Paykel

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

The idea behind CSL and Fisher Paykel 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..