Correlation Between Dupont De and Korea Information

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

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

Diversification Opportunities for Dupont De and Korea Information

-0.37

Correlation Coefficient

Dupont De  Korea Information

Very good diversification

The 3 months correlation between Dupont and Korea is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Dupont De 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 Dupont De Nemours are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Dupont De i.e., Dupont De and Korea Information go up and down completely randomly.

Pair Corralation between Dupont De and Korea Information

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.72 times more return on investment than Korea Information. However, Dupont De is 1.72 times more volatile than Korea Information Communications. It trades about -0.01 of its potential returns per unit of risk. Korea Information Communications is currently generating about -0.03 per unit of risk. If you would invest  7,557  in Dupont De Nemours on December 29, 2024 and sell it today you would lose (154.00) from holding Dupont De Nemours or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Dupont De Nemours  vs.  Korea Information Communicatio

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Korea Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Korea Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Korea Information

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

The idea behind Dupont De Nemours and Korea Information Communications 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.