Correlation Between Nufarm and LIFE +

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

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

Diversification Opportunities for Nufarm and LIFE +

-0.01

Correlation Coefficient

Nufarm  LIFE +

Good diversification

The 3 months correlation between Nufarm and LIFE is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT 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 LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of Nufarm i.e., Nufarm and LIFE + go up and down completely randomly.

Pair Corralation between Nufarm and LIFE +

Assuming the 90 days horizon Nufarm Limited is expected to under-perform the LIFE +. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm Limited is 1.56 times less risky than LIFE +. The stock trades about -0.05 of its potential returns per unit of risk. The LIFE BANC SPLIT is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  433.00  in LIFE BANC SPLIT on October 11, 2024 and sell it today you would earn a total of  157.00  from holding LIFE BANC SPLIT or generate 36.26% return on investment over 90 days.

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

Nufarm Limited  vs.  LIFE BANC SPLIT

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

LIFE BANC SPLIT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LIFE BANC SPLIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LIFE + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nufarm and LIFE +

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

The idea behind Nufarm Limited and LIFE BANC SPLIT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.