Correlation Between Nufarm Finance and Star Entertainment

Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Star Entertainment 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 Star Entertainment 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 Star Entertainment Group, you can compare the effects of market volatilities on Nufarm Finance and Star Entertainment 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 Star Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Star Entertainment.

Diversification Opportunities for Nufarm Finance and Star Entertainment

-0.35

Correlation Coefficient

Nufarm Finance  Star Entertainment

Very good diversification

The 3 months correlation between Nufarm and Star is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Star Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Entertainment 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 Star Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Entertainment has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Star Entertainment go up and down completely randomly.

Pair Corralation between Nufarm Finance and Star Entertainment

Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.08 times more return on investment than Star Entertainment. However, Nufarm Finance NZ is 12.62 times less risky than Star Entertainment. It trades about 0.01 of its potential returns per unit of risk. Star Entertainment Group is currently generating about -0.06 per unit of risk. If you would invest  9,335  in Nufarm Finance NZ on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Nufarm Finance NZ or generate 0.16% return on investment over 90 days.

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

Nufarm Finance NZ  vs.  Star Entertainment Group

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.

Star Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Star Entertainment Group 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nufarm Finance and Star Entertainment

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

The idea behind Nufarm Finance NZ and Star Entertainment Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.