Correlation Between Dupont De and New China
Can any of the company-specific risk be diversified away by investing in both Dupont De and New China 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 New China 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 New China Life, you can compare the effects of market volatilities on Dupont De and New China 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 New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and New China.
Diversification Opportunities for Dupont De and New China
Weak diversification
The 3 months correlation between Dupont and New is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life 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 New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of Dupont De i.e., Dupont De and New China go up and down completely randomly.
Pair Corralation between Dupont De and New China
Allowing for the 90-day total investment horizon Dupont De is expected to generate 8.76 times less return on investment than New China. But when comparing it to its historical volatility, Dupont De Nemours is 3.17 times less risky than New China. It trades about 0.05 of its potential returns per unit of risk. New China Life is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 256.00 in New China Life on September 2, 2024 and sell it today you would earn a total of 32.00 from holding New China Life or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dupont De Nemours vs. New China Life
Performance |
| Timeline |
| Dupont De Nemours |
| New China Life |
Dupont De and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and New China
The main advantage of trading using opposite Dupont De and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| New China vs. Geely Automobile Holdings | New China vs. Singapore Telecommunications Limited | New China vs. INTERSHOP Communications Aktiengesellschaft | New China vs. INTER CARS SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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