Correlation Between Dupont De and Compagnie

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

Diversification Opportunities for Dupont De and Compagnie

-0.54

Correlation Coefficient

Dupont De  Compagnie

Excellent diversification

The 3 months correlation between Dupont and Compagnie is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of Dupont De i.e., Dupont De and Compagnie go up and down completely randomly.

Pair Corralation between Dupont De and Compagnie

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.53 times more return on investment than Compagnie. However, Dupont De Nemours is 1.9 times less risky than Compagnie. It trades about -0.01 of its potential returns per unit of risk. Compagnie de Chemins is currently generating about -0.06 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	Very Weak
Accuracy	95.38%
Values	Daily Returns

Dupont De Nemours  vs.  Compagnie de Chemins

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.

Compagnie de Chemins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compagnie de Chemins has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Dupont De and Compagnie

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

The idea behind Dupont De Nemours and Compagnie de Chemins 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.