Correlation Between Astar and EI Du

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

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

Diversification Opportunities for Astar and EI Du

-0.14

Correlation Coefficient

Astar  EI Du

Good diversification

The 3 months correlation between Astar and CTA-P-A is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Astar and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont and Astar 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 Astar are associated (or correlated) with EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Astar i.e., Astar and EI Du go up and down completely randomly.

Pair Corralation between Astar and EI Du

Assuming the 90 days trading horizon Astar is expected to under-perform the EI Du. In addition to that, Astar is 4.63 times more volatile than EI du Pont. It trades about -0.13 of its total potential returns per unit of risk. EI du Pont is currently generating about -0.11 per unit of volatility. If you would invest  5,610  in EI du Pont on October 24, 2024 and sell it today you would lose (90.00) from holding EI du Pont or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Astar  vs.  EI du Pont

Astar

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Astar and EI Du

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

The idea behind Astar and EI du Pont 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.