Correlation Between Nufarm Finance and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and BKI Investment 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 BKI Investment 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 BKI Investment, you can compare the effects of market volatilities on Nufarm Finance and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and BKI Investment.
Diversification Opportunities for Nufarm Finance and BKI Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nufarm and BKI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and BKI Investment go up and down completely randomly.
Pair Corralation between Nufarm Finance and BKI Investment
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.94 times more return on investment than BKI Investment. However, Nufarm Finance NZ is 1.07 times less risky than BKI Investment. It trades about 0.19 of its potential returns per unit of risk. BKI Investment is currently generating about 0.05 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 214.00 from holding Nufarm Finance NZ or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. BKI Investment
Performance |
| Timeline |
| Nufarm Finance NZ |
| BKI Investment |
Nufarm Finance and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and BKI Investment
The main advantage of trading using opposite Nufarm Finance and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| Nufarm Finance vs. Champion Iron | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms | Nufarm Finance vs. Perpetual Credit Income |
| BKI Investment vs. Clime Investment Management | BKI Investment vs. Bailador Technology Invest | BKI Investment vs. Hudson Investment Group | BKI Investment vs. Macquarie Technology Group |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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