Correlation Between Nippon Light and Delta Electronics

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Can any of the company-specific risk be diversified away by investing in both Nippon Light 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 Nippon Light and Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Light Metal and Delta Electronics Public, you can compare the effects of market volatilities on Nippon Light 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 Nippon Light with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Light and Delta Electronics.

Diversification Opportunities for Nippon Light and Delta Electronics

NipponDeltaDiversified AwayNipponDeltaDiversified Away100%
-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nippon and Delta is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Light Metal 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 Nippon Light 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 Nippon Light Metal 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 Nippon Light i.e., Nippon Light and Delta Electronics go up and down completely randomly.

Pair Corralation between Nippon Light and Delta Electronics

Assuming the 90 days horizon Nippon Light Metal is expected to generate 0.28 times more return on investment than Delta Electronics. However, Nippon Light Metal is 3.63 times less risky than Delta Electronics. It trades about 0.15 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.42 per unit of risk. If you would invest  930.00  in Nippon Light Metal on November 21, 2024 and sell it today you would earn a total of  50.00  from holding Nippon Light Metal or generate 5.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nippon Light Metal  vs.  Delta Electronics Public

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-10010
JavaScript chart by amCharts 3.21.15N9L NVAW
       Timeline  
Nippon Light Metal 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Light Metal are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nippon Light may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb99.29.49.69.81010.2
Delta Electronics Public 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Delta Electronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.533.544.5

Nippon Light and Delta Electronics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.68-3.51-2.33-1.160.01961.212.433.664.89 0.050.100.15
JavaScript chart by amCharts 3.21.15N9L NVAW
       Returns  

Pair Trading with Nippon Light and Delta Electronics

The main advantage of trading using opposite Nippon Light and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Light 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 Nippon Light Metal and Delta Electronics Public 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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