Correlation Between Dupont De and Komercni Banka

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

Diversification Opportunities for Dupont De and Komercni Banka

0.43

Correlation Coefficient

Dupont De  Komercni Banka

Very weak diversification

The 3 months correlation between Dupont and Komercni is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Komercni Banka AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komercni Banka AS 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 Komercni Banka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komercni Banka AS has no effect on the direction of Dupont De i.e., Dupont De and Komercni Banka go up and down completely randomly.

Pair Corralation between Dupont De and Komercni Banka

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Komercni Banka. In addition to that, Dupont De is 1.26 times more volatile than Komercni Banka AS. It trades about -0.01 of its total potential returns per unit of risk. Komercni Banka AS is currently generating about 0.36 per unit of volatility. If you would invest  84,850  in Komercni Banka AS on December 29, 2024 and sell it today you would earn a total of  27,150  from holding Komercni Banka AS or generate 32.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Dupont De Nemours  vs.  Komercni Banka AS

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Komercni Banka AS

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Komercni Banka AS are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Komercni Banka reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Komercni Banka

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

The idea behind Dupont De Nemours and Komercni Banka AS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.