Correlation Between Nufarm and WOORI FIN
Can any of the company-specific risk be diversified away by investing in both Nufarm and WOORI FIN 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 WOORI FIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and WOORI FIN GRP, you can compare the effects of market volatilities on Nufarm and WOORI FIN 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 WOORI FIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and WOORI FIN.
Diversification Opportunities for Nufarm and WOORI FIN
Poor diversification
The 3 months correlation between Nufarm and WOORI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and WOORI FIN GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOORI FIN GRP 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 Limited are associated (or correlated) with WOORI FIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOORI FIN GRP has no effect on the direction of Nufarm i.e., Nufarm and WOORI FIN go up and down completely randomly.
Pair Corralation between Nufarm and WOORI FIN
Assuming the 90 days horizon Nufarm Limited is expected to under-perform the WOORI FIN. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm Limited is 1.94 times less risky than WOORI FIN. The stock trades about -0.04 of its potential returns per unit of risk. The WOORI FIN GRP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,307 in WOORI FIN GRP on October 25, 2024 and sell it today you would earn a total of 693.00 from holding WOORI FIN GRP or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.2% |
| Values | Daily Returns |
Nufarm Limited vs. WOORI FIN GRP
Performance |
| Timeline |
| Nufarm Limited |
| WOORI FIN GRP |
Nufarm and WOORI FIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and WOORI FIN
The main advantage of trading using opposite Nufarm and WOORI FIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, WOORI FIN 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 WOORI FIN will offset losses from the drop in WOORI FIN's long position.| Nufarm vs. Renesas Electronics | Nufarm vs. CLOVER HEALTH INV | Nufarm vs. Phibro Animal Health | Nufarm vs. Benchmark Electronics |
| WOORI FIN vs. Spirent Communications plc | WOORI FIN vs. Semiconductor Manufacturing International | WOORI FIN vs. Verizon Communications | WOORI FIN vs. Iridium Communications |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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