Correlation Between Dupont De and SHIONOGI

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

Diversification Opportunities for Dupont De and SHIONOGI

-0.55

Correlation Coefficient

Dupont De  SHIONOGI

Excellent diversification

The 3 months correlation between Dupont and SHIONOGI is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and SHIONOGI LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIONOGI LTD 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 SHIONOGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIONOGI LTD has no effect on the direction of Dupont De i.e., Dupont De and SHIONOGI go up and down completely randomly.

Pair Corralation between Dupont De and SHIONOGI

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.79 times more return on investment than SHIONOGI. However, Dupont De Nemours is 1.27 times less risky than SHIONOGI. It trades about 0.04 of its potential returns per unit of risk. SHIONOGI LTD is currently generating about -0.03 per unit of risk. If you would invest  6,716  in Dupont De Nemours on October 7, 2024 and sell it today you would earn a total of  759.00  from holding Dupont De Nemours or generate 11.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

Dupont De Nemours  vs.  SHIONOGI LTD

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SHIONOGI LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SHIONOGI LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SHIONOGI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dupont De and SHIONOGI

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

The idea behind Dupont De Nemours and SHIONOGI LTD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.