Correlation Between Delta Electronics and Sinbon Electronics
Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Sinbon Electronics 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 Sinbon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Electronics and Sinbon Electronics Co, you can compare the effects of market volatilities on Delta Electronics and Sinbon Electronics 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 Sinbon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Sinbon Electronics.
Diversification Opportunities for Delta Electronics and Sinbon Electronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Delta and Sinbon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics 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 Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of Delta Electronics i.e., Delta Electronics and Sinbon Electronics go up and down completely randomly.
Pair Corralation between Delta Electronics and Sinbon Electronics
Assuming the 90 days trading horizon Delta Electronics is expected to generate 1.15 times more return on investment than Sinbon Electronics. However, Delta Electronics is 1.15 times more volatile than Sinbon Electronics Co. It trades about 0.13 of its potential returns per unit of risk. Sinbon Electronics Co is currently generating about 0.13 per unit of risk. If you would invest 41,700 in Delta Electronics on November 3, 2024 and sell it today you would earn a total of 2,050 from holding Delta Electronics or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Electronics vs. Sinbon Electronics Co
Performance |
| Timeline |
| Delta Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Sinbon Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Delta Electronics and Sinbon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Electronics and Sinbon Electronics
The main advantage of trading using opposite Delta Electronics and Sinbon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics position performs unexpectedly, Sinbon Electronics 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 Sinbon Electronics will offset losses from the drop in Sinbon Electronics' long position.The idea behind Delta Electronics and Sinbon Electronics Co 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.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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