Correlation Between ST Dupont and Les Htels

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

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

Diversification Opportunities for ST Dupont and Les Htels

0.42

Correlation Coefficient

ST Dupont  Les Htels

Very weak diversification

The 3 months correlation between DPT and Les is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ST Dupont and Les Htels de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Htels de 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 Les Htels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Htels de has no effect on the direction of ST Dupont i.e., ST Dupont and Les Htels go up and down completely randomly.

Pair Corralation between ST Dupont and Les Htels

Assuming the 90 days trading horizon ST Dupont is expected to generate 0.28 times more return on investment than Les Htels. However, ST Dupont is 3.62 times less risky than Les Htels. It trades about 0.0 of its potential returns per unit of risk. Les Htels de is currently generating about -0.02 per unit of risk. If you would invest  10.00  in ST Dupont on December 5, 2024 and sell it today you would lose (0.02) from holding ST Dupont or give up 0.2% of portfolio value over 90 days.

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

ST Dupont  vs.  Les Htels de

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.

Les Htels de

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Les Htels de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Les Htels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ST Dupont and Les Htels

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

The idea behind ST Dupont and Les Htels de 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.