Correlation Between Event Hospitality and Nufarm

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

By analyzing existing cross correlation between Event Hospitality and and Nufarm, you can compare the effects of market volatilities on Event Hospitality and Nufarm 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 Event Hospitality with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Event Hospitality and Nufarm.

Diversification Opportunities for Event Hospitality and Nufarm

0.61

Correlation Coefficient

Event Hospitality  Nufarm

Poor diversification

The 3 months correlation between Event and Nufarm is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Event Hospitality and and Nufarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm and Event Hospitality 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 Event Hospitality and are associated (or correlated) with Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm has no effect on the direction of Event Hospitality i.e., Event Hospitality and Nufarm go up and down completely randomly.

Pair Corralation between Event Hospitality and Nufarm

Assuming the 90 days trading horizon Event Hospitality and is expected to generate 1.34 times more return on investment than Nufarm. However, Event Hospitality is 1.34 times more volatile than Nufarm. It trades about 0.15 of its potential returns per unit of risk. Nufarm is currently generating about 0.13 per unit of risk. If you would invest  1,130  in Event Hospitality and on December 29, 2024 and sell it today you would earn a total of  227.00  from holding Event Hospitality and or generate 20.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Event Hospitality and  vs.  Nufarm

Event Hospitality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Event Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nufarm

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nufarm are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Nufarm unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Event Hospitality and Nufarm

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

The idea behind Event Hospitality and and Nufarm 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.