Correlation Between Dupont De and OCBC

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Can any of the company-specific risk be diversified away by investing in both Dupont De and OCBC 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 OCBC 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 OCBC, you can compare the effects of market volatilities on Dupont De and OCBC 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 OCBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and OCBC.

Diversification Opportunities for Dupont De and OCBC

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Dupont and OCBC is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and OCBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBC 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 OCBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBC has no effect on the direction of Dupont De i.e., Dupont De and OCBC go up and down completely randomly.

Pair Corralation between Dupont De and OCBC

Allowing for the 90-day total investment horizon Dupont De is expected to generate 10.98 times less return on investment than OCBC. In addition to that, Dupont De is 1.17 times more volatile than OCBC. It trades about 0.02 of its total potential returns per unit of risk. OCBC is currently generating about 0.29 per unit of volatility. If you would invest  1,061  in OCBC on August 30, 2024 and sell it today you would earn a total of  96.00  from holding OCBC or generate 9.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dupont De Nemours  vs.  OCBC

 Performance 
       Timeline  
Dupont De Nemours 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
OCBC 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in OCBC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, OCBC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dupont De and OCBC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dupont De and OCBC

The main advantage of trading using opposite Dupont De and OCBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, OCBC 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 OCBC will offset losses from the drop in OCBC's long position.
The idea behind Dupont De Nemours and OCBC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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