Correlation Between Dupont De and Ambow Education

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

Diversification Opportunities for Dupont De and Ambow Education

0.0

Correlation Coefficient

Dupont De  Ambow Education

Pay attention - limited upside

The 3 months correlation between Dupont and Ambow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Ambow Education Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambow Education Holding 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 Ambow Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambow Education Holding has no effect on the direction of Dupont De i.e., Dupont De and Ambow Education go up and down completely randomly.

Pair Corralation between Dupont De and Ambow Education

Allowing for the 90-day total investment horizon Dupont De is expected to generate 6.38 times less return on investment than Ambow Education. But when comparing it to its historical volatility, Dupont De Nemours is 7.33 times less risky than Ambow Education. It trades about 0.02 of its potential returns per unit of risk. Ambow Education Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  341.00  in Ambow Education Holding on December 28, 2024 and sell it today you would lose (79.00) from holding Ambow Education Holding or give up 23.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Ambow Education Holding

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 1 (%) 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.

Ambow Education Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambow Education Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Ambow Education displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Ambow Education

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

The idea behind Dupont De Nemours and Ambow Education Holding 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.