Correlation Between Platinum Asset and Nufarm Finance

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

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

Diversification Opportunities for Platinum Asset and Nufarm Finance

0.45

Correlation Coefficient

Platinum Asset  Nufarm Finance

Very weak diversification

The 3 months correlation between Platinum and Nufarm is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asset Management and Nufarm Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Finance and Platinum Asset 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 Platinum Asset Management are associated (or correlated) with Nufarm Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Finance has no effect on the direction of Platinum Asset i.e., Platinum Asset and Nufarm Finance go up and down completely randomly.

Pair Corralation between Platinum Asset and Nufarm Finance

Assuming the 90 days trading horizon Platinum Asset Management is expected to under-perform the Nufarm Finance. In addition to that, Platinum Asset is 2.69 times more volatile than Nufarm Finance. It trades about -0.06 of its total potential returns per unit of risk. Nufarm Finance is currently generating about -0.07 per unit of volatility. If you would invest  9,360  in Nufarm Finance on March 30, 2025 and sell it today you would lose (490.00) from holding Nufarm Finance or give up 5.24% of portfolio value over 90 days.

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

Platinum Asset Management  vs.  Nufarm Finance

Platinum Asset Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Platinum Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nufarm Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nufarm Finance 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.

Pair Trading with Platinum Asset and Nufarm Finance

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

The idea behind Platinum Asset Management and Nufarm Finance 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.