Correlation Between ST Dupont and Delfingen

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

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

Diversification Opportunities for ST Dupont and Delfingen

-0.87

Correlation Coefficient

ST Dupont  Delfingen

Pay attention - limited upside

The 3 months correlation between DPT and Delfingen is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding ST Dupont and Delfingen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delfingen 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 Delfingen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delfingen has no effect on the direction of ST Dupont i.e., ST Dupont and Delfingen go up and down completely randomly.

Pair Corralation between ST Dupont and Delfingen

Assuming the 90 days trading horizon ST Dupont is expected to generate 1.35 times less return on investment than Delfingen. But when comparing it to its historical volatility, ST Dupont is 2.54 times less risky than Delfingen. It trades about 0.13 of its potential returns per unit of risk. Delfingen is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,340  in Delfingen on September 23, 2024 and sell it today you would earn a total of  50.00  from holding Delfingen or generate 3.73% return on investment over 90 days.

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

ST Dupont  vs.  Delfingen

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.

Delfingen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delfingen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ST Dupont and Delfingen

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

The idea behind ST Dupont and Delfingen 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.