Correlation Between Hansen Technologies and Nufarm

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

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

Diversification Opportunities for Hansen Technologies and Nufarm

0.51

Correlation Coefficient

Hansen Technologies  Nufarm

Very weak diversification

The 3 months correlation between Hansen and Nufarm is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hansen Technologies and Nufarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm and Hansen Technologies 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 Hansen Technologies 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 Hansen Technologies i.e., Hansen Technologies and Nufarm go up and down completely randomly.

Pair Corralation between Hansen Technologies and Nufarm

Assuming the 90 days trading horizon Hansen Technologies is expected to under-perform the Nufarm. In addition to that, Hansen Technologies is 1.05 times more volatile than Nufarm. It trades about -0.07 of its total potential returns per unit of risk. Nufarm is currently generating about 0.01 per unit of volatility. If you would invest  385.00  in Nufarm on December 4, 2024 and sell it today you would earn a total of  1.00  from holding Nufarm or generate 0.26% return on investment over 90 days.

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

Hansen Technologies  vs.  Nufarm

Hansen Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hansen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nufarm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nufarm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Nufarm 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 Hansen Technologies and Nufarm

The main advantage of trading using opposite Hansen Technologies and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansen Technologies 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 Hansen Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.