Correlation Between Australian Agricultural and Nufarm
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Nufarm 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 Agricultural and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Nufarm Limited, you can compare the effects of market volatilities on Australian Agricultural and Nufarm 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 Agricultural with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Nufarm.
Diversification Opportunities for Australian Agricultural and Nufarm
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and Nufarm is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and Australian Agricultural 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 Agricultural are associated (or correlated) with Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Nufarm go up and down completely randomly.
Pair Corralation between Australian Agricultural and Nufarm
Assuming the 90 days horizon Australian Agricultural is expected to generate 24.06 times less return on investment than Nufarm. But when comparing it to its historical volatility, Australian Agricultural is 1.02 times less risky than Nufarm. It trades about 0.01 of its potential returns per unit of risk. Nufarm Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 222.00 in Nufarm Limited on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Nufarm Limited or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Australian Agricultural vs. Nufarm Limited
Performance |
| Timeline |
| Australian Agricultural |
| Nufarm Limited |
Australian Agricultural and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Nufarm
The main advantage of trading using opposite Australian Agricultural and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Nufarm 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 will offset losses from the drop in Nufarm's long position.| Australian Agricultural vs. Virtus Investment Partners | Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. EAT WELL INVESTMENT | Australian Agricultural vs. Seven West Media |
| Nufarm vs. ADRIATIC METALS LS 013355 | Nufarm vs. Playa Hotels Resorts | Nufarm vs. InterContinental Hotels Group | Nufarm vs. Hyatt Hotels |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |