Correlation Between Dupont De and Samart Digital

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

Diversification Opportunities for Dupont De and Samart Digital

-0.21

Correlation Coefficient

Dupont De  Samart Digital

Very good diversification

The 3 months correlation between Dupont and Samart is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Samart Digital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Digital Public 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 Samart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Digital Public has no effect on the direction of Dupont De i.e., Dupont De and Samart Digital go up and down completely randomly.

Pair Corralation between Dupont De and Samart Digital

Allowing for the 90-day total investment horizon Dupont De is expected to generate 86.83 times less return on investment than Samart Digital. But when comparing it to its historical volatility, Dupont De Nemours is 16.86 times less risky than Samart Digital. It trades about 0.03 of its potential returns per unit of risk. Samart Digital Public is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Samart Digital Public on September 3, 2024 and sell it today you would earn a total of  3.00  from holding Samart Digital Public or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Dupont De Nemours  vs.  Samart Digital Public

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Samart Digital Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Samart Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Samart Digital

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

The idea behind Dupont De Nemours and Samart Digital Public 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.