Correlation Between Dupont De and KODEX KRX

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

Diversification Opportunities for Dupont De and KODEX KRX

0.36

Correlation Coefficient

Dupont De  KODEX KRX

Weak diversification

The 3 months correlation between Dupont and KODEX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and KODEX KRX Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX KRX Climate 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 KODEX KRX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX KRX Climate has no effect on the direction of Dupont De i.e., Dupont De and KODEX KRX go up and down completely randomly.

Pair Corralation between Dupont De and KODEX KRX

Allowing for the 90-day total investment horizon Dupont De is expected to generate 18.46 times less return on investment than KODEX KRX. But when comparing it to its historical volatility, Dupont De Nemours is 1.28 times less risky than KODEX KRX. It trades about 0.01 of its potential returns per unit of risk. KODEX KRX Climate is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  898,000  in KODEX KRX Climate on October 27, 2024 and sell it today you would earn a total of  48,000  from holding KODEX KRX Climate or generate 5.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Dupont De Nemours  vs.  KODEX KRX Climate

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 latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

KODEX KRX Climate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KODEX KRX Climate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Dupont De and KODEX KRX

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

The idea behind Dupont De Nemours and KODEX KRX Climate 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.