Correlation Between Delpha Construction and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Delpha Construction and Cathay Real 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 Delpha Construction and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delpha Construction Co and Cathay Real Estate, you can compare the effects of market volatilities on Delpha Construction and Cathay Real 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 Delpha Construction with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delpha Construction and Cathay Real.
Diversification Opportunities for Delpha Construction and Cathay Real
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delpha and Cathay is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Delpha Construction Co and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and Delpha Construction 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 Delpha Construction Co are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Delpha Construction i.e., Delpha Construction and Cathay Real go up and down completely randomly.
Pair Corralation between Delpha Construction and Cathay Real
Assuming the 90 days trading horizon Delpha Construction Co is expected to generate 1.85 times more return on investment than Cathay Real. However, Delpha Construction is 1.85 times more volatile than Cathay Real Estate. It trades about 0.08 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.21 per unit of risk. If you would invest 3,885 in Delpha Construction Co on November 5, 2024 and sell it today you would earn a total of 65.00 from holding Delpha Construction Co or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delpha Construction Co vs. Cathay Real Estate
Performance |
| Timeline |
| Delpha Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cathay Real Estate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Delpha Construction and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delpha Construction and Cathay Real
The main advantage of trading using opposite Delpha Construction and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delpha Construction position performs unexpectedly, Cathay Real 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 Cathay Real will offset losses from the drop in Cathay Real's long position.The idea behind Delpha Construction Co and Cathay Real Estate 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |