Correlation Between Dupont De and Celanese

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

Diversification Opportunities for Dupont De and Celanese

0.82

Correlation Coefficient

Dupont De  Celanese

Very poor diversification

The 3 months correlation between Dupont and Celanese is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese 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 Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of Dupont De i.e., Dupont De and Celanese go up and down completely randomly.

Pair Corralation between Dupont De and Celanese

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.66 times more return on investment than Celanese. However, Dupont De Nemours is 1.52 times less risky than Celanese. It trades about -0.09 of its potential returns per unit of risk. Celanese is currently generating about -0.19 per unit of risk. If you would invest  7,554  in Dupont De Nemours on January 26, 2024 and sell it today you would lose (158.00) from holding Dupont De Nemours or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Celanese

Dupont De Nemours

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Celanese

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Celanese are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Celanese may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Dupont De and Celanese

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

The idea behind Dupont De Nemours and Celanese 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.