Correlation Between Nufarm Finance and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Australian Unity 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 Nufarm Finance and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Finance NZ and Australian Unity Office, you can compare the effects of market volatilities on Nufarm Finance and Australian Unity 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 Nufarm Finance with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Australian Unity.
Diversification Opportunities for Nufarm Finance and Australian Unity
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nufarm and Australian is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office and Nufarm Finance 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 Nufarm Finance NZ are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Australian Unity go up and down completely randomly.
Pair Corralation between Nufarm Finance and Australian Unity
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.45 times more return on investment than Australian Unity. However, Nufarm Finance NZ is 2.24 times less risky than Australian Unity. It trades about 0.16 of its potential returns per unit of risk. Australian Unity Office is currently generating about -0.24 per unit of risk. If you would invest 9,026 in Nufarm Finance NZ on August 30, 2024 and sell it today you would earn a total of 174.00 from holding Nufarm Finance NZ or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. Australian Unity Office
Performance |
| Timeline |
| Nufarm Finance NZ |
| Australian Unity Office |
Nufarm Finance and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Australian Unity
The main advantage of trading using opposite Nufarm Finance and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Nufarm Finance vs. Champion Iron | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms | Nufarm Finance vs. Perpetual Credit Income |
| Australian Unity vs. Champion Iron | Australian Unity vs. Ridley | Australian Unity vs. Peel Mining | Australian Unity 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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