Correlation Between Dupont De and Major Cineplex

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

Diversification Opportunities for Dupont De and Major Cineplex

0.51

Correlation Coefficient

Dupont De  Major Cineplex

Very weak diversification

The 3 months correlation between Dupont and Major is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Major Cineplex Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Lifestyle 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 Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Lifestyle has no effect on the direction of Dupont De i.e., Dupont De and Major Cineplex go up and down completely randomly.

Pair Corralation between Dupont De and Major Cineplex

Allowing for the 90-day total investment horizon Dupont De is expected to generate 3.46 times less return on investment than Major Cineplex. But when comparing it to its historical volatility, Dupont De Nemours is 1.5 times less risky than Major Cineplex. It trades about 0.04 of its potential returns per unit of risk. Major Cineplex Lifestyle is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Major Cineplex Lifestyle on September 12, 2024 and sell it today you would earn a total of  36.00  from holding Major Cineplex Lifestyle or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Dupont De Nemours  vs.  Major Cineplex Lifestyle

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

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.

Major Cineplex Lifestyle

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Major Cineplex Lifestyle are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Major Cineplex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dupont De and Major Cineplex

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

The idea behind Dupont De Nemours and Major Cineplex Lifestyle 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.