Correlation Between Dupont De and Lotte Corp
Can any of the company-specific risk be diversified away by investing in both Dupont De and Lotte Corp 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 Dupont De and Lotte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and Lotte Corp, you can compare the effects of market volatilities on Dupont De and Lotte Corp 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 Dupont De with a short position of Lotte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Lotte Corp.
Diversification Opportunities for Dupont De and Lotte Corp
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and Lotte is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Lotte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Corp and Dupont De 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 Dupont De Nemours are associated (or correlated) with Lotte Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Corp has no effect on the direction of Dupont De i.e., Dupont De and Lotte Corp go up and down completely randomly.
Pair Corralation between Dupont De and Lotte Corp
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.89 times more return on investment than Lotte Corp. However, Dupont De Nemours is 1.13 times less risky than Lotte Corp. It trades about 0.03 of its potential returns per unit of risk. Lotte Corp is currently generating about -0.1 per unit of risk. If you would invest 7,997 in Dupont De Nemours on September 2, 2024 and sell it today you would earn a total of 362.00 from holding Dupont De Nemours or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Dupont De Nemours vs. Lotte Corp
Performance |
| Timeline |
| Dupont De Nemours |
| Lotte Corp |
Dupont De and Lotte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Lotte Corp
The main advantage of trading using opposite Dupont De and Lotte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Lotte Corp 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 Lotte Corp will offset losses from the drop in Lotte Corp's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
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Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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