Correlation Between Dupont De and Jiangsu Cai

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

Diversification Opportunities for Dupont De and Jiangsu Cai

0.17

Correlation Coefficient

Dupont De  Jiangsu Cai

Average diversification

The 3 months correlation between Dupont and Jiangsu is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Jiangsu Cai Qin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Cai Qin 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 Jiangsu Cai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Cai Qin has no effect on the direction of Dupont De i.e., Dupont De and Jiangsu Cai go up and down completely randomly.

Pair Corralation between Dupont De and Jiangsu Cai

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Jiangsu Cai. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 2.97 times less risky than Jiangsu Cai. The stock trades about -0.01 of its potential returns per unit of risk. The Jiangsu Cai Qin is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,833  in Jiangsu Cai Qin on December 23, 2024 and sell it today you would earn a total of  1,264  from holding Jiangsu Cai Qin or generate 68.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Dupont De Nemours  vs.  Jiangsu Cai Qin

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Jiangsu Cai Qin

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Cai Qin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Cai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Jiangsu Cai

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

The idea behind Dupont De Nemours and Jiangsu Cai Qin 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 Anywhere module to track or share privately all of your investments from the convenience of any device.