Correlation Between ST Dupont and Agrogeneration

Can any of the company-specific risk be diversified away by investing in both ST Dupont and Agrogeneration 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 ST Dupont and Agrogeneration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ST Dupont and Agrogeneration, you can compare the effects of market volatilities on ST Dupont and Agrogeneration 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 ST Dupont with a short position of Agrogeneration. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Dupont and Agrogeneration.

Diversification Opportunities for ST Dupont and Agrogeneration

-0.31

Correlation Coefficient

ST Dupont  Agrogeneration

Very good diversification

The 3 months correlation between DPT and Agrogeneration is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ST Dupont and Agrogeneration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrogeneration and ST Dupont 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 ST Dupont are associated (or correlated) with Agrogeneration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrogeneration has no effect on the direction of ST Dupont i.e., ST Dupont and Agrogeneration go up and down completely randomly.

Pair Corralation between ST Dupont and Agrogeneration

Assuming the 90 days trading horizon ST Dupont is expected to generate 7.34 times less return on investment than Agrogeneration. But when comparing it to its historical volatility, ST Dupont is 3.67 times less risky than Agrogeneration. It trades about 0.13 of its potential returns per unit of risk. Agrogeneration is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4.70  in Agrogeneration on September 23, 2024 and sell it today you would earn a total of  1.24  from holding Agrogeneration or generate 26.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ST Dupont  vs.  Agrogeneration

ST Dupont

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ST Dupont are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ST Dupont sustained solid returns over the last few months and may actually be approaching a breakup point.

Agrogeneration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agrogeneration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agrogeneration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ST Dupont and Agrogeneration

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

The idea behind ST Dupont and Agrogeneration 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 Transaction History module to view history of all your transactions and understand their impact on performance.