Correlation Between Dupont De and Shenmao Technology
Can any of the company-specific risk be diversified away by investing in both Dupont De and Shenmao Technology 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 Shenmao Technology 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 Shenmao Technology, you can compare the effects of market volatilities on Dupont De and Shenmao Technology 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 Shenmao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Shenmao Technology.
Diversification Opportunities for Dupont De and Shenmao Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dupont and Shenmao is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Shenmao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenmao Technology 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 Shenmao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenmao Technology has no effect on the direction of Dupont De i.e., Dupont De and Shenmao Technology go up and down completely randomly.
Pair Corralation between Dupont De and Shenmao Technology
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.92 times more return on investment than Shenmao Technology. However, Dupont De Nemours is 1.09 times less risky than Shenmao Technology. It trades about 0.03 of its potential returns per unit of risk. Shenmao Technology is currently generating about -0.12 per unit of risk. If you would invest 8,299 in Dupont De Nemours on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Dupont De Nemours or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dupont De Nemours vs. Shenmao Technology
Performance |
| Timeline |
| Dupont De Nemours |
| Shenmao Technology |
Dupont De and Shenmao Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Shenmao Technology
The main advantage of trading using opposite Dupont De and Shenmao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Shenmao Technology 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 Shenmao Technology will offset losses from the drop in Shenmao Technology's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Shenmao Technology vs. BES Engineering Co | Shenmao Technology vs. Continental Holdings Corp | Shenmao Technology vs. Kee Tai Properties | Shenmao Technology vs. Hung Sheng Construction |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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