Correlation Between Dupont De and Green Star

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

Diversification Opportunities for Dupont De and Green Star

-0.48

Correlation Coefficient

Dupont De  Green Star

Very good diversification

The 3 months correlation between Dupont and Green is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Green Star Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Star Products 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 Green Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Star Products has no effect on the direction of Dupont De i.e., Dupont De and Green Star go up and down completely randomly.

Pair Corralation between Dupont De and Green Star

Allowing for the 90-day total investment horizon Dupont De is expected to generate 33.63 times less return on investment than Green Star. But when comparing it to its historical volatility, Dupont De Nemours is 17.66 times less risky than Green Star. It trades about 0.03 of its potential returns per unit of risk. Green Star Products is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Green Star Products on December 1, 2024 and sell it today you would lose (0.07) from holding Green Star Products or give up 70.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Dupont De Nemours  vs.  Green Star Products

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.

Green Star Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Star Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Green Star is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dupont De and Green Star

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

The idea behind Dupont De Nemours and Green Star Products 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.