Correlation Between Dupont De and Induction Healthcare

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

Diversification Opportunities for Dupont De and Induction Healthcare

-0.18

Correlation Coefficient

Dupont De  Induction Healthcare

Good diversification

The 3 months correlation between Dupont and Induction is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare 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 Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Dupont De i.e., Dupont De and Induction Healthcare go up and down completely randomly.

Pair Corralation between Dupont De and Induction Healthcare

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.72 times more return on investment than Induction Healthcare. However, Dupont De Nemours is 1.39 times less risky than Induction Healthcare. It trades about -0.01 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.27 per unit of risk. If you would invest  7,557  in Dupont De Nemours on December 30, 2024 and sell it today you would lose (154.00) from holding Dupont De Nemours or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Dupont De Nemours  vs.  Induction Healthcare Group

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.

Induction Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Induction Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dupont De and Induction Healthcare

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

The idea behind Dupont De Nemours and Induction Healthcare Group 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.