Correlation Between Nufarm Finance and Data#3

Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Data#3 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 Nufarm Finance and Data#3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nufarm Finance NZ and Data3, you can compare the effects of market volatilities on Nufarm Finance and Data#3 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 Nufarm Finance with a short position of Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Data#3.

Diversification Opportunities for Nufarm Finance and Data#3

0.63

Correlation Coefficient

Nufarm Finance  Data#3

Poor diversification

The 3 months correlation between Nufarm and Data#3 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Data3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data#3 and Nufarm Finance 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 Nufarm Finance NZ are associated (or correlated) with Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data#3 has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Data#3 go up and down completely randomly.

Pair Corralation between Nufarm Finance and Data#3

Assuming the 90 days trading horizon Nufarm Finance is expected to generate 38.28 times less return on investment than Data#3. But when comparing it to its historical volatility, Nufarm Finance NZ is 3.05 times less risky than Data#3. It trades about 0.01 of its potential returns per unit of risk. Data3 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  629.00  in Data3 on December 29, 2024 and sell it today you would earn a total of  88.00  from holding Data3 or generate 13.99% return on investment over 90 days.

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

Nufarm Finance NZ  vs.  Data3

Nufarm Finance NZ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nufarm Finance NZ has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Data#3

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data3 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Data#3 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nufarm Finance and Data#3

The main advantage of trading using opposite Nufarm Finance and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's long position.

The idea behind Nufarm Finance NZ and Data3 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.