Correlation Between Fisher Paykel and Challenger

Can any of the company-specific risk be diversified away by investing in both Fisher Paykel 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 Fisher Paykel and Challenger 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 Challenger, you can compare the effects of market volatilities on Fisher Paykel 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 Fisher Paykel with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisher Paykel and Challenger.

Diversification Opportunities for Fisher Paykel and Challenger

-0.26

Correlation Coefficient

Fisher Paykel  Challenger

Very good diversification

The 3 months correlation between Fisher and Challenger is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fisher Paykel Healthcare and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 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 Fisher Paykel i.e., Fisher Paykel and Challenger go up and down completely randomly.

Pair Corralation between Fisher Paykel and Challenger

Assuming the 90 days trading horizon Fisher Paykel Healthcare is expected to generate 0.77 times more return on investment than Challenger. However, Fisher Paykel Healthcare is 1.3 times less risky than Challenger. It trades about 0.02 of its potential returns per unit of risk. Challenger is currently generating about -0.09 per unit of risk. If you would invest  3,424  in Fisher Paykel Healthcare on September 4, 2024 and sell it today you would earn a total of  39.00  from holding Fisher Paykel Healthcare or generate 1.14% return on investment over 90 days.

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

Fisher Paykel Healthcare  vs.  Challenger

Fisher Paykel Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fisher Paykel Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

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 Fisher Paykel and Challenger

The main advantage of trading using opposite Fisher Paykel and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisher Paykel 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 Fisher Paykel 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.