Correlation Between Agrogeneration and ST Dupont

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

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

Diversification Opportunities for Agrogeneration and ST Dupont

-0.31

Correlation Coefficient

Agrogeneration  ST Dupont

Very good diversification

The 3 months correlation between Agrogeneration and DPT is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Agrogeneration and ST Dupont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Dupont and Agrogeneration 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 Agrogeneration are associated (or correlated) with ST Dupont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Dupont has no effect on the direction of Agrogeneration i.e., Agrogeneration and ST Dupont go up and down completely randomly.

Pair Corralation between Agrogeneration and ST Dupont

Assuming the 90 days trading horizon Agrogeneration is expected to generate 3.67 times more return on investment than ST Dupont. However, Agrogeneration is 3.67 times more volatile than ST Dupont. It trades about 0.25 of its potential returns per unit of risk. ST Dupont is currently generating about 0.13 per unit of risk. If you would invest  4.70  in Agrogeneration on September 23, 2024 and sell it today you would earn a total of  1.24  from holding Agrogeneration or generate 26.38% return on investment over 90 days.

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

Agrogeneration  vs.  ST Dupont

Agrogeneration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agrogeneration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agrogeneration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ST Dupont

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ST Dupont are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ST Dupont sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agrogeneration and ST Dupont

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

The idea behind Agrogeneration and ST Dupont 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.