Correlation Between Dairy Farm and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Delta Electronics Public, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Delta Electronics.
Diversification Opportunities for Dairy Farm and Delta Electronics
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dairy and Delta is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public and Dairy Farm 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 Dairy Farm International 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 Public has no effect on the direction of Dairy Farm i.e., Dairy Farm and Delta Electronics go up and down completely randomly.
Pair Corralation between Dairy Farm and Delta Electronics
Assuming the 90 days trading horizon Dairy Farm is expected to generate 3.92 times less return on investment than Delta Electronics. But when comparing it to its historical volatility, Dairy Farm International is 1.47 times less risky than Delta Electronics. It trades about 0.04 of its potential returns per unit of risk. Delta Electronics Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 149.00 in Delta Electronics Public on November 1, 2024 and sell it today you would earn a total of 221.00 from holding Delta Electronics Public or generate 148.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Delta Electronics Public
Performance |
| Timeline |
| Dairy Farm International |
| Delta Electronics Public |
Dairy Farm and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Delta Electronics
The main advantage of trading using opposite Dairy Farm and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. USWE SPORTS AB | Dairy Farm vs. SPORT LISBOA E | Dairy Farm vs. PNC Financial Services | Dairy Farm vs. Mitsui Chemicals |
| Delta Electronics vs. Nippon Light Metal | Delta Electronics vs. ARDAGH METAL PACDL 0001 | Delta Electronics vs. GREENX METALS LTD | Delta Electronics vs. The Yokohama Rubber |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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