Correlation Between Dupont De and BrasilAgro Companhia

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

Diversification Opportunities for Dupont De and BrasilAgro Companhia

-0.44

Correlation Coefficient

Dupont De  BrasilAgro Companhia

Very good diversification

The 3 months correlation between Dupont and BrasilAgro is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and BrasilAgro Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrasilAgro Companhia 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 BrasilAgro Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrasilAgro Companhia has no effect on the direction of Dupont De i.e., Dupont De and BrasilAgro Companhia go up and down completely randomly.

Pair Corralation between Dupont De and BrasilAgro Companhia

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.73 times more return on investment than BrasilAgro Companhia. However, Dupont De Nemours is 1.38 times less risky than BrasilAgro Companhia. It trades about 0.03 of its potential returns per unit of risk. BrasilAgro Companhia is currently generating about -0.01 per unit of risk. If you would invest  8,212  in Dupont De Nemours on September 2, 2024 and sell it today you would earn a total of  147.00  from holding Dupont De Nemours or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  BrasilAgro Companhia

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

BrasilAgro Companhia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BrasilAgro Companhia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BrasilAgro Companhia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dupont De and BrasilAgro Companhia

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

The idea behind Dupont De Nemours and BrasilAgro Companhia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.