Correlation Between Dupont De and Buima
Can any of the company-specific risk be diversified away by investing in both Dupont De and Buima 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 Buima 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 Buima Group, you can compare the effects of market volatilities on Dupont De and Buima 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 Buima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Buima.
Diversification Opportunities for Dupont De and Buima
Very weak diversification
The 3 months correlation between Dupont and Buima is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Buima Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buima Group 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 Buima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buima Group has no effect on the direction of Dupont De i.e., Dupont De and Buima go up and down completely randomly.
Pair Corralation between Dupont De and Buima
Allowing for the 90-day total investment horizon Dupont De is expected to generate 11.33 times less return on investment than Buima. But when comparing it to its historical volatility, Dupont De Nemours is 3.56 times less risky than Buima. It trades about 0.03 of its potential returns per unit of risk. Buima Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,227 in Buima Group on October 25, 2024 and sell it today you would earn a total of 133.00 from holding Buima Group or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dupont De Nemours vs. Buima Group
Performance |
| Timeline |
| Dupont De Nemours |
| Buima Group |
Dupont De and Buima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Buima
The main advantage of trading using opposite Dupont De and Buima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Buima 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 Buima will offset losses from the drop in Buima's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| Buima vs. Sunspring Metal Corp | Buima vs. Champion Building Materials | Buima vs. China Glaze Co | Buima vs. CKM Building Material |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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