Correlation Between Dupont De and California Nanotechnologies

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

Diversification Opportunities for Dupont De and California Nanotechnologies

0.71

Correlation Coefficient

Dupont De  California Nanotechnologies

Poor diversification

The 3 months correlation between Dupont and California is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and California Nanotechnologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Nanotechnologies 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 California Nanotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Nanotechnologies has no effect on the direction of Dupont De i.e., Dupont De and California Nanotechnologies go up and down completely randomly.

Pair Corralation between Dupont De and California Nanotechnologies

Allowing for the 90-day total investment horizon Dupont De is expected to generate 28.7 times less return on investment than California Nanotechnologies. But when comparing it to its historical volatility, Dupont De Nemours is 7.28 times less risky than California Nanotechnologies. It trades about 0.03 of its potential returns per unit of risk. California Nanotechnologies Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  28.00  in California Nanotechnologies Corp on September 12, 2024 and sell it today you would earn a total of  44.00  from holding California Nanotechnologies Corp or generate 157.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Dupont De Nemours  vs.  California Nanotechnologies Co

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

California Nanotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Nanotechnologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, California Nanotechnologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dupont De and California Nanotechnologies

The main advantage of trading using opposite Dupont De and California Nanotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, California Nanotechnologies 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 California Nanotechnologies will offset losses from the drop in California Nanotechnologies' long position.

The idea behind Dupont De Nemours and California Nanotechnologies Corp 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.