Correlation Between Nufarm Finance and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Charter Hall 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 Charter Hall 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 Charter Hall Education, you can compare the effects of market volatilities on Nufarm Finance and Charter Hall 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 Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Charter Hall.
Diversification Opportunities for Nufarm Finance and Charter Hall
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nufarm and Charter is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Charter Hall Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Education 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 Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Education has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Charter Hall go up and down completely randomly.
Pair Corralation between Nufarm Finance and Charter Hall
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.49 times more return on investment than Charter Hall. However, Nufarm Finance NZ is 2.05 times less risky than Charter Hall. It trades about 0.05 of its potential returns per unit of risk. Charter Hall Education is currently generating about -0.01 per unit of risk. If you would invest 7,822 in Nufarm Finance NZ on November 5, 2024 and sell it today you would earn a total of 1,498 from holding Nufarm Finance NZ or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. Charter Hall Education
Performance |
| Timeline |
| Nufarm Finance NZ |
| Charter Hall Education |
Nufarm Finance and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Charter Hall
The main advantage of trading using opposite Nufarm Finance and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall's long position.| Nufarm Finance vs. Westpac Banking | Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Australian Dairy Farms |
| Charter Hall vs. AiMedia Technologies | Charter Hall vs. Duxton Broadacre Farms | Charter Hall vs. Diversified United Investment | Charter Hall vs. Seven West Media |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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