Correlation Between Hansen Technologies and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Hansen Technologies 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 Hansen Technologies and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansen Technologies and Nufarm Finance NZ, you can compare the effects of market volatilities on Hansen Technologies 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 Hansen Technologies with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansen Technologies and Nufarm Finance.
Diversification Opportunities for Hansen Technologies and Nufarm Finance
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hansen and Nufarm is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hansen Technologies 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 Hansen Technologies 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 Hansen Technologies 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 Hansen Technologies i.e., Hansen Technologies and Nufarm Finance go up and down completely randomly.
Pair Corralation between Hansen Technologies and Nufarm Finance
Assuming the 90 days trading horizon Hansen Technologies is expected to generate 1.66 times more return on investment than Nufarm Finance. However, Hansen Technologies is 1.66 times more volatile than Nufarm Finance NZ. It trades about 0.29 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.08 per unit of risk. If you would invest 421.00 in Hansen Technologies on August 28, 2024 and sell it today you would earn a total of 136.00 from holding Hansen Technologies or generate 32.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansen Technologies vs. Nufarm Finance NZ
Performance |
| Timeline |
| Hansen Technologies |
| Nufarm Finance NZ |
Hansen Technologies and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansen Technologies and Nufarm Finance
The main advantage of trading using opposite Hansen Technologies and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansen Technologies 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.| Hansen Technologies vs. Energy Resources | Hansen Technologies vs. 88 Energy | Hansen Technologies vs. Amani Gold | Hansen Technologies vs. A1 Investments Resources |
| Nufarm Finance vs. Westpac Banking | Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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