Correlation Between Nufarm and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Nufarm and Mitsui Chemicals 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 Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and Mitsui Chemicals, you can compare the effects of market volatilities on Nufarm and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and Mitsui Chemicals.
Diversification Opportunities for Nufarm and Mitsui Chemicals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nufarm and Mitsui is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of Nufarm i.e., Nufarm and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Nufarm and Mitsui Chemicals
Assuming the 90 days horizon Nufarm Limited is expected to generate 1.03 times more return on investment than Mitsui Chemicals. However, Nufarm is 1.03 times more volatile than Mitsui Chemicals. It trades about 0.23 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.18 per unit of risk. If you would invest 222.00 in Nufarm Limited on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Nufarm Limited or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nufarm Limited vs. Mitsui Chemicals
Performance |
| Timeline |
| Nufarm Limited |
| Mitsui Chemicals |
Nufarm and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and Mitsui Chemicals
The main advantage of trading using opposite Nufarm and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| Nufarm vs. ADRIATIC METALS LS 013355 | Nufarm vs. Playa Hotels Resorts | Nufarm vs. InterContinental Hotels Group | Nufarm vs. Hyatt Hotels |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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