Correlation Between Dupont De and Galexxy Holdings

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

Diversification Opportunities for Dupont De and Galexxy Holdings

0.08

Correlation Coefficient

Dupont De  Galexxy Holdings

Significant diversification

The 3 months correlation between Dupont and Galexxy is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Galexxy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galexxy Holdings 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 Galexxy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galexxy Holdings has no effect on the direction of Dupont De i.e., Dupont De and Galexxy Holdings go up and down completely randomly.

Pair Corralation between Dupont De and Galexxy Holdings

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Galexxy Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 20.15 times less risky than Galexxy Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Galexxy Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.59  in Galexxy Holdings on December 28, 2024 and sell it today you would earn a total of  0.36  from holding Galexxy Holdings or generate 61.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Dupont De Nemours  vs.  Galexxy Holdings

Dupont De Nemours

Risk-Adjusted Performance

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.

Galexxy Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galexxy Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Galexxy Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Galexxy Holdings

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

The idea behind Dupont De Nemours and Galexxy Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.