Correlation Between ST Dupont and Body One

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

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

Diversification Opportunities for ST Dupont and Body One

0.7

Correlation Coefficient

ST Dupont  Body One

Poor diversification

The 3 months correlation between DPT and Body is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ST Dupont and Body One SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Body One SA 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 Body One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Body One SA has no effect on the direction of ST Dupont i.e., ST Dupont and Body One go up and down completely randomly.

Pair Corralation between ST Dupont and Body One

Assuming the 90 days trading horizon ST Dupont is expected to generate 2.69 times more return on investment than Body One. However, ST Dupont is 2.69 times more volatile than Body One SA. It trades about 0.13 of its potential returns per unit of risk. Body One SA is currently generating about 0.13 per unit of risk. If you would invest  7.90  in ST Dupont on December 26, 2024 and sell it today you would earn a total of  2.10  from holding ST Dupont or generate 26.58% return on investment over 90 days.

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

ST Dupont  vs.  Body One SA

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.

Body One SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Body One SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Body One may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ST Dupont and Body One

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

The idea behind ST Dupont and Body One SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.