Correlation Between Dupont De and China Teletech

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

Diversification Opportunities for Dupont De and China Teletech

-0.42

Correlation Coefficient

Dupont De  China Teletech

Very good diversification

The 3 months correlation between Dupont and China is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and China Teletech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Teletech 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 China Teletech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Teletech Holding has no effect on the direction of Dupont De i.e., Dupont De and China Teletech go up and down completely randomly.

Pair Corralation between Dupont De and China Teletech

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the China Teletech. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 45.84 times less risky than China Teletech. The stock trades about -0.05 of its potential returns per unit of risk. The China Teletech Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.21  in China Teletech Holding on September 17, 2024 and sell it today you would lose (0.13) from holding China Teletech Holding or give up 61.9% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  China Teletech Holding

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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.

China Teletech Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Teletech Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, China Teletech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and China Teletech

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

The idea behind Dupont De Nemours and China Teletech 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.