Correlation Between Dupont De and XIAO I

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

Diversification Opportunities for Dupont De and XIAO I

0.25

Correlation Coefficient

Dupont De  XIAO I

Modest diversification

The 3 months correlation between Dupont and XIAO is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American 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 XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of Dupont De i.e., Dupont De and XIAO I go up and down completely randomly.

Pair Corralation between Dupont De and XIAO I

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.45 times less return on investment than XIAO I. But when comparing it to its historical volatility, Dupont De Nemours is 3.14 times less risky than XIAO I. It trades about 0.17 of its potential returns per unit of risk. XIAO I American is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  411.00  in XIAO I American on December 2, 2024 and sell it today you would earn a total of  56.00  from holding XIAO I American or generate 13.63% return on investment over 90 days.

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

Dupont De Nemours  vs.  XIAO I American

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.

XIAO I American

Risk-Adjusted Performance

Very Weak

Over the last 90 days XIAO I American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Dupont De and XIAO I

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

The idea behind Dupont De Nemours and XIAO I American 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..