Correlation Between Dupont De and Naked Brand

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

Diversification Opportunities for Dupont De and Naked Brand

0.0

Correlation Coefficient

Dupont De  Naked Brand

Pay attention - limited upside

The 3 months correlation between Dupont and Naked is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Naked Brand Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Brand Group 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 Naked Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Brand Group has no effect on the direction of Dupont De i.e., Dupont De and Naked Brand go up and down completely randomly.

Pair Corralation between Dupont De and Naked Brand

If you would invest  6,082  in Dupont De Nemours on February 7, 2024 and sell it today you would earn a total of  1,771  from holding Dupont De Nemours or generate 29.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dupont De Nemours  vs.  Naked Brand Group

Dupont De Nemours

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Naked Brand Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naked Brand Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Naked Brand is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dupont De and Naked Brand

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

The idea behind Dupont De Nemours and Naked Brand Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.