Correlation Between Nufarm and PagerDuty

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

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

Diversification Opportunities for Nufarm and PagerDuty

0.06

Correlation Coefficient

Nufarm  PagerDuty

Significant diversification

The 3 months correlation between Nufarm and PagerDuty is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and PagerDuty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagerDuty 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 Limited are associated (or correlated) with PagerDuty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagerDuty has no effect on the direction of Nufarm i.e., Nufarm and PagerDuty go up and down completely randomly.

Pair Corralation between Nufarm and PagerDuty

Assuming the 90 days horizon Nufarm Limited is expected to generate 1.08 times more return on investment than PagerDuty. However, Nufarm is 1.08 times more volatile than PagerDuty. It trades about -0.07 of its potential returns per unit of risk. PagerDuty is currently generating about -0.43 per unit of risk. If you would invest  220.00  in Nufarm Limited on October 9, 2024 and sell it today you would lose (6.00) from holding Nufarm Limited or give up 2.73% of portfolio value over 90 days.

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

Nufarm Limited  vs.  PagerDuty

Nufarm Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nufarm Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nufarm is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PagerDuty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PagerDuty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PagerDuty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nufarm and PagerDuty

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

The idea behind Nufarm Limited and PagerDuty 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.