Correlation Between Dupont De and Carbios

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

Diversification Opportunities for Dupont De and Carbios

-0.16

Correlation Coefficient

Dupont De  Carbios

Good diversification

The 3 months correlation between Dupont and Carbios is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios 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 Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of Dupont De i.e., Dupont De and Carbios go up and down completely randomly.

Pair Corralation between Dupont De and Carbios

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.29 times more return on investment than Carbios. However, Dupont De Nemours is 3.48 times less risky than Carbios. It trades about 0.03 of its potential returns per unit of risk. Carbios is currently generating about -0.37 per unit of risk. If you would invest  8,212  in Dupont De Nemours on August 31, 2024 and sell it today you would earn a total of  178.00  from holding Dupont De Nemours or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Dupont De Nemours  vs.  Carbios

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.

Carbios

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carbios has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Dupont De and Carbios

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

The idea behind Dupont De Nemours and Carbios 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.