Correlation Between Dupont De and Lam Soon
Can any of the company-specific risk be diversified away by investing in both Dupont De and Lam Soon 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 Lam Soon 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 Lam Soon Public, you can compare the effects of market volatilities on Dupont De and Lam Soon 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 Lam Soon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Lam Soon.
Diversification Opportunities for Dupont De and Lam Soon
Average diversification
The 3 months correlation between Dupont and Lam is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Lam Soon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Soon Public 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 Lam Soon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Soon Public has no effect on the direction of Dupont De i.e., Dupont De and Lam Soon go up and down completely randomly.
Pair Corralation between Dupont De and Lam Soon
Allowing for the 90-day total investment horizon Dupont De is expected to generate 3.38 times less return on investment than Lam Soon. In addition to that, Dupont De is 1.47 times more volatile than Lam Soon Public. It trades about 0.03 of its total potential returns per unit of risk. Lam Soon Public is currently generating about 0.13 per unit of volatility. If you would invest 486.00 in Lam Soon Public on August 27, 2024 and sell it today you would earn a total of 14.00 from holding Lam Soon Public or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Lam Soon Public
Performance |
| Timeline |
| Dupont De Nemours |
| Lam Soon Public |
Dupont De and Lam Soon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Lam Soon
The main advantage of trading using opposite Dupont De and Lam Soon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Lam Soon 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 Lam Soon will offset losses from the drop in Lam Soon's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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