Correlation Between Delta Electronics and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Asia Electronic 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 Asia Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Electronics and Asia Electronic Material, you can compare the effects of market volatilities on Delta Electronics and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Asia Electronic.
Diversification Opportunities for Delta Electronics and Asia Electronic
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Delta and Asia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Delta Electronics i.e., Delta Electronics and Asia Electronic go up and down completely randomly.
Pair Corralation between Delta Electronics and Asia Electronic
Assuming the 90 days trading horizon Delta Electronics is expected to generate 1.01 times more return on investment than Asia Electronic. However, Delta Electronics is 1.01 times more volatile than Asia Electronic Material. It trades about -0.02 of its potential returns per unit of risk. Asia Electronic Material is currently generating about -0.04 per unit of risk. If you would invest 39,450 in Delta Electronics on September 2, 2024 and sell it today you would lose (1,350) from holding Delta Electronics or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Electronics vs. Asia Electronic Material
Performance |
| Timeline |
| Delta Electronics |
| Asia Electronic Material |
Delta Electronics and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Electronics and Asia Electronic
The main advantage of trading using opposite Delta Electronics and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.The idea behind Delta Electronics and Asia Electronic Material 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.| Asia Electronic vs. Hon Hai Precision | Asia Electronic vs. Delta Electronics | Asia Electronic vs. LARGAN Precision Co | Asia Electronic vs. Yageo 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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