Correlation Between Dupont De and Balco Group

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

Diversification Opportunities for Dupont De and Balco Group

0.21

Correlation Coefficient

Dupont De  Balco Group

Modest diversification

The 3 months correlation between Dupont and Balco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Balco Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balco Group AB 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 Balco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balco Group AB has no effect on the direction of Dupont De i.e., Dupont De and Balco Group go up and down completely randomly.

Pair Corralation between Dupont De and Balco Group

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.66 times more return on investment than Balco Group. However, Dupont De Nemours is 1.51 times less risky than Balco Group. It trades about 0.03 of its potential returns per unit of risk. Balco Group AB is currently generating about -0.03 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 Together
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Dupont De Nemours  vs.  Balco Group AB

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.

Balco Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balco Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Balco Group 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 Balco Group

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

The idea behind Dupont De Nemours and Balco Group AB 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.