Correlation Between REVO INSURANCE and Nufarm

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

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

Diversification Opportunities for REVO INSURANCE and Nufarm

0.23

Correlation Coefficient

REVO INSURANCE  Nufarm

Modest diversification

The 3 months correlation between REVO and Nufarm is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and REVO INSURANCE 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 REVO INSURANCE SPA 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 Limited has no effect on the direction of REVO INSURANCE i.e., REVO INSURANCE and Nufarm go up and down completely randomly.

Pair Corralation between REVO INSURANCE and Nufarm

Assuming the 90 days horizon REVO INSURANCE is expected to generate 1.22 times less return on investment than Nufarm. In addition to that, REVO INSURANCE is 1.95 times more volatile than Nufarm Limited. It trades about 0.04 of its total potential returns per unit of risk. Nufarm Limited is currently generating about 0.1 per unit of volatility. If you would invest  208.00  in Nufarm Limited on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Nufarm Limited or generate 10.58% return on investment over 90 days.

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

REVO INSURANCE SPA  vs.  Nufarm Limited

REVO INSURANCE SPA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REVO INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nufarm Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nufarm Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nufarm may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with REVO INSURANCE and Nufarm

The main advantage of trading using opposite REVO INSURANCE and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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 REVO INSURANCE SPA and Nufarm Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.