Correlation Between Nufarm and Autosports
Can any of the company-specific risk be diversified away by investing in both Nufarm and Autosports 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 and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm and Autosports Group, you can compare the effects of market volatilities on Nufarm and Autosports 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 with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and Autosports.
Diversification Opportunities for Nufarm and Autosports
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nufarm and Autosports is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Nufarm 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 are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Nufarm i.e., Nufarm and Autosports go up and down completely randomly.
Pair Corralation between Nufarm and Autosports
Assuming the 90 days trading horizon Nufarm is expected to under-perform the Autosports. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm is 1.02 times less risky than Autosports. The stock trades about -0.05 of its potential returns per unit of risk. The Autosports Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Autosports Group on August 24, 2024 and sell it today you would lose (18.00) from holding Autosports Group or give up 8.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm vs. Autosports Group
Performance |
| Timeline |
| Nufarm |
| Autosports Group |
Nufarm and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and Autosports
The main advantage of trading using opposite Nufarm and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Nufarm vs. Truscott Mining Corp | Nufarm vs. Autosports Group | Nufarm vs. Qbe Insurance Group | Nufarm vs. Ora Banda Mining |
| Autosports vs. Aneka Tambang Tbk | Autosports vs. Unibail Rodamco Westfield SE | Autosports vs. Macquarie Group | Autosports vs. Commonwealth Bank |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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