Correlation Between Fisher Paykel and Macquarie Technology

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

Diversification Opportunities for Fisher Paykel and Macquarie Technology

0.41

Correlation Coefficient

Fisher Paykel  Macquarie Technology

Very weak diversification

The 3 months correlation between Fisher and Macquarie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fisher Paykel Healthcare and Macquarie Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Technology 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 Macquarie Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Technology has no effect on the direction of Fisher Paykel i.e., Fisher Paykel and Macquarie Technology go up and down completely randomly.

Pair Corralation between Fisher Paykel and Macquarie Technology

Assuming the 90 days trading horizon Fisher Paykel Healthcare is expected to generate 0.88 times more return on investment than Macquarie Technology. However, Fisher Paykel Healthcare is 1.14 times less risky than Macquarie Technology. It trades about 0.07 of its potential returns per unit of risk. Macquarie Technology Group is currently generating about 0.02 per unit of risk. If you would invest  3,408  in Fisher Paykel Healthcare on October 5, 2024 and sell it today you would earn a total of  56.00  from holding Fisher Paykel Healthcare or generate 1.64% return on investment over 90 days.

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

Fisher Paykel Healthcare  vs.  Macquarie Technology Group

Fisher Paykel Healthcare

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fisher Paykel Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Fisher Paykel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Macquarie Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Technology Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Macquarie Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fisher Paykel and Macquarie Technology

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

The idea behind Fisher Paykel Healthcare and Macquarie Technology Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.