Correlation Between Dupont De and Applied Opt

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

Diversification Opportunities for Dupont De and Applied Opt

0.85

Correlation Coefficient

Dupont De  Applied Opt

Very poor diversification

The 3 months correlation between Dupont and Applied is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt 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 Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of Dupont De i.e., Dupont De and Applied Opt go up and down completely randomly.

Pair Corralation between Dupont De and Applied Opt

Allowing for the 90-day total investment horizon Dupont De is expected to generate 6.62 times less return on investment than Applied Opt. But when comparing it to its historical volatility, Dupont De Nemours is 3.65 times less risky than Applied Opt. It trades about 0.08 of its potential returns per unit of risk. Applied Opt is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,496  in Applied Opt on May 2, 2025 and sell it today you would earn a total of  868.00  from holding Applied Opt or generate 58.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Dupont De Nemours  vs.  Applied Opt

Dupont De Nemours

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Dupont De may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Applied Opt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Opt are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Applied Opt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Applied Opt

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

The idea behind Dupont De Nemours and Applied Opt 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.