Correlation Between Falcon Metals and Nufarm Finance

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

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

Diversification Opportunities for Falcon Metals and Nufarm Finance

-0.77

Correlation Coefficient

Falcon Metals  Nufarm Finance

Pay attention - limited upside

The 3 months correlation between Falcon and Nufarm is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Nufarm Finance NZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Finance NZ and Falcon Metals 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 Falcon Metals are associated (or correlated) with Nufarm Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Finance NZ has no effect on the direction of Falcon Metals i.e., Falcon Metals and Nufarm Finance go up and down completely randomly.

Pair Corralation between Falcon Metals and Nufarm Finance

Assuming the 90 days trading horizon Falcon Metals is expected to generate 10.31 times more return on investment than Nufarm Finance. However, Falcon Metals is 10.31 times more volatile than Nufarm Finance NZ. It trades about 0.02 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.06 per unit of risk. If you would invest  22.00  in Falcon Metals on September 12, 2024 and sell it today you would lose (7.00) from holding Falcon Metals or give up 31.82% of portfolio value over 90 days.

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

Falcon Metals  vs.  Nufarm Finance NZ

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals 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 essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nufarm Finance NZ

Risk-Adjusted Performance

9 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nufarm Finance NZ are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nufarm Finance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Falcon Metals and Nufarm Finance

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

The idea behind Falcon Metals and Nufarm Finance NZ 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.