Correlation Between Delpha Construction and New Asia
Can any of the company-specific risk be diversified away by investing in both Delpha Construction and New Asia 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 New Asia 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 New Asia Construction, you can compare the effects of market volatilities on Delpha Construction and New Asia 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 New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delpha Construction and New Asia.
Diversification Opportunities for Delpha Construction and New Asia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delpha and New is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Delpha Construction Co and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction 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 New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of Delpha Construction i.e., Delpha Construction and New Asia go up and down completely randomly.
Pair Corralation between Delpha Construction and New Asia
Assuming the 90 days trading horizon Delpha Construction is expected to generate 3.73 times less return on investment than New Asia. But when comparing it to its historical volatility, Delpha Construction Co is 1.17 times less risky than New Asia. It trades about 0.02 of its potential returns per unit of risk. New Asia Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,210 in New Asia Construction on November 3, 2024 and sell it today you would earn a total of 500.00 from holding New Asia Construction or generate 41.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delpha Construction Co vs. New Asia Construction
Performance |
| Timeline |
| Delpha Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| New Asia Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Delpha Construction and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delpha Construction and New Asia
The main advantage of trading using opposite Delpha Construction and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delpha Construction position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia's long position.The idea behind Delpha Construction Co and New Asia Construction 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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