Correlation Between Delta Electronics and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Nan Ya 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 Delta Electronics and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Electronics and Nan Ya Plastics, you can compare the effects of market volatilities on Delta Electronics and Nan Ya 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 Delta Electronics with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Nan Ya.
Diversification Opportunities for Delta Electronics and Nan Ya
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Delta and Nan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics and Delta Electronics 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 Delta Electronics are associated (or correlated) with Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Plastics has no effect on the direction of Delta Electronics i.e., Delta Electronics and Nan Ya go up and down completely randomly.
Pair Corralation between Delta Electronics and Nan Ya
Assuming the 90 days trading horizon Delta Electronics is expected to generate 1.4 times more return on investment than Nan Ya. However, Delta Electronics is 1.4 times more volatile than Nan Ya Plastics. It trades about 0.04 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.09 per unit of risk. If you would invest 29,450 in Delta Electronics on August 30, 2024 and sell it today you would earn a total of 9,150 from holding Delta Electronics or generate 31.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Electronics vs. Nan Ya Plastics
Performance |
| Timeline |
| Delta Electronics |
| Nan Ya Plastics |
Delta Electronics and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Electronics and Nan Ya
The main advantage of trading using opposite Delta Electronics and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics position performs unexpectedly, Nan Ya 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 Nan Ya will offset losses from the drop in Nan Ya's long position.| Delta Electronics vs. Quanta Computer | Delta Electronics vs. Hon Hai Precision | Delta Electronics vs. United Microelectronics | Delta Electronics vs. LARGAN Precision Co |
| Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical Corp |
Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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