Correlation Between Dupont De and Deutsche Telekom

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

Diversification Opportunities for Dupont De and Deutsche Telekom

0.26

Correlation Coefficient

Dupont De  Deutsche Telekom

Modest diversification

The 3 months correlation between Dupont and Deutsche is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Dupont De i.e., Dupont De and Deutsche Telekom go up and down completely randomly.

Pair Corralation between Dupont De and Deutsche Telekom

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Deutsche Telekom. In addition to that, Dupont De is 1.18 times more volatile than Deutsche Telekom AG. It trades about -0.02 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.16 per unit of volatility. If you would invest  3,028  in Deutsche Telekom AG on November 29, 2024 and sell it today you would earn a total of  356.00  from holding Deutsche Telekom AG or generate 11.76% 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.  Deutsche Telekom AG

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.

Deutsche Telekom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Telekom AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Deutsche Telekom may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Dupont De and Deutsche Telekom

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

The idea behind Dupont De Nemours and Deutsche Telekom AG 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.