Correlation Between Kronos Worldwide and Dupont De

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

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

Diversification Opportunities for Kronos Worldwide and Dupont De

0.86

Correlation Coefficient

Kronos Worldwide  Dupont De

Very poor diversification

The 3 months correlation between Kronos and Dupont is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours and Kronos Worldwide 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 Kronos Worldwide are associated (or correlated) with Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of Kronos Worldwide i.e., Kronos Worldwide and Dupont De go up and down completely randomly.

Pair Corralation between Kronos Worldwide and Dupont De

Considering the 90-day investment horizon Kronos Worldwide is expected to generate 1.63 times more return on investment than Dupont De. However, Kronos Worldwide is 1.63 times more volatile than Dupont De Nemours. It trades about 0.02 of its potential returns per unit of risk. Dupont De Nemours is currently generating about 0.02 per unit of risk. If you would invest  1,138  in Kronos Worldwide on August 30, 2024 and sell it today you would earn a total of  8.00  from holding Kronos Worldwide or generate 0.7% return on investment over 90 days.

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

Kronos Worldwide  vs.  Dupont De Nemours

Kronos Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kronos Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kronos Worldwide is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kronos Worldwide and Dupont De

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

The idea behind Kronos Worldwide and Dupont De Nemours 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.