Correlation Between Nufarm and Hudson Investment

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

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

Diversification Opportunities for Nufarm and Hudson Investment

0.0

Correlation Coefficient

Nufarm  Hudson Investment

Pay attention - limited upside

The 3 months correlation between Nufarm and Hudson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm and Hudson Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Investment and Nufarm 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 are associated (or correlated) with Hudson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Investment has no effect on the direction of Nufarm i.e., Nufarm and Hudson Investment go up and down completely randomly.

Pair Corralation between Nufarm and Hudson Investment

Assuming the 90 days trading horizon Nufarm is expected to under-perform the Hudson Investment. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm is 1.06 times less risky than Hudson Investment. The stock trades about -0.04 of its potential returns per unit of risk. The Hudson Investment Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Hudson Investment Group on October 5, 2024 and sell it today you would lose (3.00) from holding Hudson Investment Group or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Nufarm  vs.  Hudson Investment Group

Nufarm

Risk-Adjusted Performance

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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.

Hudson Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Hudson Investment 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 Nufarm and Hudson Investment

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

The idea behind Nufarm and Hudson Investment 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.