Correlation Between Australian United and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Australian United and Nufarm Finance 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 Australian United and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian United Investment and Nufarm Finance NZ, you can compare the effects of market volatilities on Australian United and Nufarm Finance 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 Australian United with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Nufarm Finance.
Diversification Opportunities for Australian United and Nufarm Finance
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Nufarm is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Nufarm Finance NZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Finance NZ and Australian United 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 Australian United Investment are associated (or correlated) with Nufarm Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Finance NZ has no effect on the direction of Australian United i.e., Australian United and Nufarm Finance go up and down completely randomly.
Pair Corralation between Australian United and Nufarm Finance
Assuming the 90 days trading horizon Australian United is expected to generate 1.43 times less return on investment than Nufarm Finance. But when comparing it to its historical volatility, Australian United Investment is 1.03 times less risky than Nufarm Finance. It trades about 0.04 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,764 in Nufarm Finance NZ on September 1, 2024 and sell it today you would earn a total of 586.00 from holding Nufarm Finance NZ or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian United Investment vs. Nufarm Finance NZ
Performance |
| Timeline |
| Australian United |
| Nufarm Finance NZ |
Australian United and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian United and Nufarm Finance
The main advantage of trading using opposite Australian United and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Nufarm Finance 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 Nufarm Finance will offset losses from the drop in Nufarm Finance's long position.| Australian United vs. Sandon Capital Investments | Australian United vs. Pinnacle Investment Management | Australian United vs. Macquarie Technology Group | Australian United vs. BKI Investment |
| Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |