Correlation Between Delta Electronics and Great Taipei
Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Great Taipei 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 Great Taipei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Electronics and Great Taipei Gas, you can compare the effects of market volatilities on Delta Electronics and Great Taipei 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 Great Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Great Taipei.
Diversification Opportunities for Delta Electronics and Great Taipei
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Delta and Great is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Great Taipei Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Taipei Gas 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 Great Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Taipei Gas has no effect on the direction of Delta Electronics i.e., Delta Electronics and Great Taipei go up and down completely randomly.
Pair Corralation between Delta Electronics and Great Taipei
Assuming the 90 days trading horizon Delta Electronics is expected to generate 5.66 times more return on investment than Great Taipei. However, Delta Electronics is 5.66 times more volatile than Great Taipei Gas. It trades about 0.05 of its potential returns per unit of risk. Great Taipei Gas is currently generating about -0.12 per unit of risk. If you would invest 33,700 in Delta Electronics on August 31, 2024 and sell it today you would earn a total of 4,400 from holding Delta Electronics or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Electronics vs. Great Taipei Gas
Performance |
| Timeline |
| Delta Electronics |
| Great Taipei Gas |
Delta Electronics and Great Taipei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Electronics and Great Taipei
The main advantage of trading using opposite Delta Electronics and Great Taipei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics position performs unexpectedly, Great Taipei 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 Great Taipei will offset losses from the drop in Great Taipei's long position.The idea behind Delta Electronics and Great Taipei Gas 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.| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Shin Natural |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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