Correlation Between G8 Education and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both G8 Education 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 G8 Education and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Nufarm Finance NZ, you can compare the effects of market volatilities on G8 Education 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 G8 Education with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Nufarm Finance.
Diversification Opportunities for G8 Education and Nufarm Finance
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GEM and Nufarm is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education 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 G8 Education 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 G8 Education 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 G8 Education i.e., G8 Education and Nufarm Finance go up and down completely randomly.
Pair Corralation between G8 Education and Nufarm Finance
Assuming the 90 days trading horizon G8 Education is expected to under-perform the Nufarm Finance. In addition to that, G8 Education is 2.64 times more volatile than Nufarm Finance NZ. It trades about -0.08 of its total potential returns per unit of risk. Nufarm Finance NZ is currently generating about -0.08 per unit of volatility. If you would invest 9,150 in Nufarm Finance NZ on August 25, 2024 and sell it today you would lose (95.00) from holding Nufarm Finance NZ or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Nufarm Finance NZ
Performance |
| Timeline |
| G8 Education |
| Nufarm Finance NZ |
G8 Education and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Nufarm Finance
The main advantage of trading using opposite G8 Education and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education 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.| G8 Education vs. Dexus Convenience Retail | G8 Education vs. Kneomedia | G8 Education vs. Richmond Vanadium Technology | G8 Education vs. Retail Food Group |
| Nufarm Finance vs. Tombador Iron | Nufarm Finance vs. Garda Diversified Ppty | Nufarm Finance vs. Platinum Asia Investments | Nufarm Finance vs. Regal Investment |
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.
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