Correlation Between Chicony Electronics and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both Chicony Electronics and Delta 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 Chicony Electronics and Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chicony Electronics Co and Delta Electronics, you can compare the effects of market volatilities on Chicony Electronics and Delta 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 Chicony Electronics with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicony Electronics and Delta Electronics.
Diversification Opportunities for Chicony Electronics and Delta Electronics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chicony and Delta is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Electronics Co and Delta Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics and Chicony 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 Chicony Electronics Co are associated (or correlated) with Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics has no effect on the direction of Chicony Electronics i.e., Chicony Electronics and Delta Electronics go up and down completely randomly.
Pair Corralation between Chicony Electronics and Delta Electronics
Assuming the 90 days trading horizon Chicony Electronics Co is expected to generate 1.05 times more return on investment than Delta Electronics. However, Chicony Electronics is 1.05 times more volatile than Delta Electronics. It trades about 0.06 of its potential returns per unit of risk. Delta Electronics is currently generating about 0.03 per unit of risk. If you would invest 10,500 in Chicony Electronics Co on August 31, 2024 and sell it today you would earn a total of 5,200 from holding Chicony Electronics Co or generate 49.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chicony Electronics Co vs. Delta Electronics
Performance |
| Timeline |
| Chicony Electronics |
| Delta Electronics |
Chicony Electronics and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chicony Electronics and Delta Electronics
The main advantage of trading using opposite Chicony Electronics and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicony Electronics position performs unexpectedly, Delta 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.The idea behind Chicony Electronics Co and Delta Electronics 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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