Correlation Between Dupont De and Guangdong Transtek

Can any of the company-specific risk be diversified away by investing in both Dupont De and Guangdong Transtek 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 Guangdong Transtek 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 Guangdong Transtek Medical, you can compare the effects of market volatilities on Dupont De and Guangdong Transtek 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 Guangdong Transtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Guangdong Transtek.

Diversification Opportunities for Dupont De and Guangdong Transtek

-0.39

Correlation Coefficient

Dupont De  Guangdong Transtek

Very good diversification

The 3 months correlation between Dupont and Guangdong is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Guangdong Transtek Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Transtek 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 Guangdong Transtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Transtek has no effect on the direction of Dupont De i.e., Dupont De and Guangdong Transtek go up and down completely randomly.

Pair Corralation between Dupont De and Guangdong Transtek

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.13 times more return on investment than Guangdong Transtek. However, Dupont De Nemours is 7.55 times less risky than Guangdong Transtek. It trades about -0.55 of its potential returns per unit of risk. Guangdong Transtek Medical is currently generating about -0.08 per unit of risk. If you would invest  8,208  in Dupont De Nemours on October 11, 2024 and sell it today you would lose (763.00) from holding Dupont De Nemours or give up 9.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Dupont De Nemours  vs.  Guangdong Transtek Medical

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Guangdong Transtek

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Transtek Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Transtek may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dupont De and Guangdong Transtek

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

The idea behind Dupont De Nemours and Guangdong Transtek Medical 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.