Correlation Between ST Dupont and EPC Groupe

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

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

Diversification Opportunities for ST Dupont and EPC Groupe

0.6

Correlation Coefficient

ST Dupont  EPC Groupe

Poor diversification

The 3 months correlation between DPT and EPC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ST Dupont and EPC Groupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPC Groupe 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 EPC Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPC Groupe has no effect on the direction of ST Dupont i.e., ST Dupont and EPC Groupe go up and down completely randomly.

Pair Corralation between ST Dupont and EPC Groupe

Assuming the 90 days trading horizon ST Dupont is expected to generate 122.64 times less return on investment than EPC Groupe. But when comparing it to its historical volatility, ST Dupont is 1.16 times less risky than EPC Groupe. It trades about 0.0 of its potential returns per unit of risk. EPC Groupe is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  19,800  in EPC Groupe on December 5, 2024 and sell it today you would earn a total of  700.00  from holding EPC Groupe or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

ST Dupont  vs.  EPC Groupe

ST Dupont

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ST Dupont are ranked lower than 10 (%) 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.

EPC Groupe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EPC Groupe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ST Dupont and EPC Groupe

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

The idea behind ST Dupont and EPC Groupe 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.