Correlation Between Australian Dairy and Navigator Global

Can any of the company-specific risk be diversified away by investing in both Australian Dairy and Navigator Global 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 Australian Dairy and Navigator Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Australian Dairy Farms and Navigator Global Investments, you can compare the effects of market volatilities on Australian Dairy and Navigator Global 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 Australian Dairy with a short position of Navigator Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and Navigator Global.

Diversification Opportunities for Australian Dairy and Navigator Global

-0.58

Correlation Coefficient

Australian Dairy  Navigator Global

Excellent diversification

The 3 months correlation between Australian and Navigator is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and Navigator Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navigator Global Inv and Australian Dairy 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 Australian Dairy Farms are associated (or correlated) with Navigator Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navigator Global Inv has no effect on the direction of Australian Dairy i.e., Australian Dairy and Navigator Global go up and down completely randomly.

Pair Corralation between Australian Dairy and Navigator Global

Assuming the 90 days trading horizon Australian Dairy Farms is expected to under-perform the Navigator Global. In addition to that, Australian Dairy is 2.02 times more volatile than Navigator Global Investments. It trades about -0.07 of its total potential returns per unit of risk. Navigator Global Investments is currently generating about 0.04 per unit of volatility. If you would invest  175.00  in Navigator Global Investments on December 30, 2024 and sell it today you would earn a total of  9.00  from holding Navigator Global Investments or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Australian Dairy Farms  vs.  Navigator Global Investments

Australian Dairy Farms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Australian Dairy Farms has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Navigator Global Inv

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Navigator Global Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Navigator Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Australian Dairy and Navigator Global

The main advantage of trading using opposite Australian Dairy and Navigator Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, Navigator Global 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 Navigator Global will offset losses from the drop in Navigator Global's long position.

The idea behind Australian Dairy Farms and Navigator Global Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.