Correlation Between Diamyd Medical and Nufarm
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical 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 Diamyd Medical and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and Nufarm Limited, you can compare the effects of market volatilities on Diamyd Medical 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 Diamyd Medical with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Nufarm.
Diversification Opportunities for Diamyd Medical and Nufarm
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamyd and Nufarm is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and Diamyd Medical 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 Diamyd Medical AB 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 Diamyd Medical i.e., Diamyd Medical and Nufarm go up and down completely randomly.
Pair Corralation between Diamyd Medical and Nufarm
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 2.01 times more return on investment than Nufarm. However, Diamyd Medical is 2.01 times more volatile than Nufarm Limited. It trades about 0.1 of its potential returns per unit of risk. Nufarm Limited is currently generating about 0.01 per unit of risk. If you would invest 105.00 in Diamyd Medical AB on September 5, 2024 and sell it today you would earn a total of 8.00 from holding Diamyd Medical AB or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Nufarm Limited
Performance |
| Timeline |
| Diamyd Medical AB |
| Nufarm Limited |
Diamyd Medical and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Nufarm
The main advantage of trading using opposite Diamyd Medical and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical 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.| Diamyd Medical vs. Nufarm Limited | Diamyd Medical vs. SOFI TECHNOLOGIES | Diamyd Medical vs. ACCSYS TECHPLC EO | Diamyd Medical vs. AAC TECHNOLOGHLDGADR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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