Correlation Between Dupont De and Grupo Catalana

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

Diversification Opportunities for Dupont De and Grupo Catalana

0.24

Correlation Coefficient

Dupont De  Grupo Catalana

Modest diversification

The 3 months correlation between Dupont and Grupo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Grupo Catalana Occidente in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Catalana Occidente 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 Grupo Catalana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Catalana Occidente has no effect on the direction of Dupont De i.e., Dupont De and Grupo Catalana go up and down completely randomly.

Pair Corralation between Dupont De and Grupo Catalana

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Grupo Catalana. In addition to that, Dupont De is 1.43 times more volatile than Grupo Catalana Occidente. It trades about -0.07 of its total potential returns per unit of risk. Grupo Catalana Occidente is currently generating about 0.06 per unit of volatility. If you would invest  3,715  in Grupo Catalana Occidente on October 25, 2024 and sell it today you would earn a total of  105.00  from holding Grupo Catalana Occidente or generate 2.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Dupont De Nemours  vs.  Grupo Catalana Occidente

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.

Grupo Catalana Occidente

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Catalana Occidente are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Catalana is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dupont De and Grupo Catalana

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

The idea behind Dupont De Nemours and Grupo Catalana Occidente 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.