Correlation Between Dupont De and STM Group
Can any of the company-specific risk be diversified away by investing in both Dupont De and STM Group 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 STM Group 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 STM Group Plc, you can compare the effects of market volatilities on Dupont De and STM Group 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 STM Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and STM Group.
Diversification Opportunities for Dupont De and STM Group
Weak diversification
The 3 months correlation between Dupont and STM is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and STM Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STM Group Plc 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 STM Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STM Group Plc has no effect on the direction of Dupont De i.e., Dupont De and STM Group go up and down completely randomly.
Pair Corralation between Dupont De and STM Group
Allowing for the 90-day total investment horizon Dupont De is expected to generate 43.95 times less return on investment than STM Group. But when comparing it to its historical volatility, Dupont De Nemours is 1.53 times less risky than STM Group. It trades about 0.01 of its potential returns per unit of risk. STM Group Plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,050 in STM Group Plc on August 29, 2024 and sell it today you would earn a total of 100.00 from holding STM Group Plc or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 22.73% |
| Values | Daily Returns |
Dupont De Nemours vs. STM Group Plc
Performance |
| Timeline |
| Dupont De Nemours |
| STM Group Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Dupont De and STM Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and STM Group
The main advantage of trading using opposite Dupont De and STM Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, STM Group 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 STM Group will offset losses from the drop in STM Group's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| STM Group vs. Silvercorp Metals | STM Group vs. Bisichi Mining PLC | STM Group vs. International Consolidated Airlines | STM Group vs. Greenroc Mining PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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