Correlation Between Delta Air and Hansa Investment

Can any of the company-specific risk be diversified away by investing in both Delta Air and Hansa Investment 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 Delta Air and Hansa Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delta Air Lines and Hansa Investment, you can compare the effects of market volatilities on Delta Air and Hansa Investment 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 Delta Air with a short position of Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Hansa Investment.

Diversification Opportunities for Delta Air and Hansa Investment

0.21

Correlation Coefficient

Delta Air  Hansa Investment

Modest diversification

The 3 months correlation between Delta and Hansa is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment and Delta Air 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 Delta Air Lines are associated (or correlated) with Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Delta Air i.e., Delta Air and Hansa Investment go up and down completely randomly.

Pair Corralation between Delta Air and Hansa Investment

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.21 times more return on investment than Hansa Investment. However, Delta Air is 1.21 times more volatile than Hansa Investment. It trades about 0.08 of its potential returns per unit of risk. Hansa Investment is currently generating about 0.06 per unit of risk. If you would invest  3,560  in Delta Air Lines on September 14, 2024 and sell it today you would earn a total of  2,674  from holding Delta Air Lines or generate 75.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.25%
Values	Daily Returns

Delta Air Lines  vs.  Hansa Investment

Delta Air Lines

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Delta Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hansa Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hansa Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hansa Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Delta Air and Hansa Investment

The main advantage of trading using opposite Delta Air and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.

The idea behind Delta Air Lines and Hansa Investment 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.