Correlation Between Hota Industrial and Delta Electronics

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

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

Diversification Opportunities for Hota Industrial and Delta Electronics

-0.03

Correlation Coefficient

Hota Industrial  Delta Electronics

Good diversification

The 3 months correlation between Hota and Delta is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hota Industrial Mfg and Delta Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics and Hota Industrial 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 Hota Industrial Mfg 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 has no effect on the direction of Hota Industrial i.e., Hota Industrial and Delta Electronics go up and down completely randomly.

Pair Corralation between Hota Industrial and Delta Electronics

Assuming the 90 days trading horizon Hota Industrial Mfg is expected to generate 1.66 times more return on investment than Delta Electronics. However, Hota Industrial is 1.66 times more volatile than Delta Electronics. It trades about 0.0 of its potential returns per unit of risk. Delta Electronics is currently generating about -0.02 per unit of risk. If you would invest  6,720  in Hota Industrial Mfg on September 2, 2024 and sell it today you would lose (260.00) from holding Hota Industrial Mfg or give up 3.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hota Industrial Mfg  vs.  Delta Electronics

Hota Industrial Mfg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hota Industrial Mfg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hota Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Delta Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Delta Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hota Industrial and Delta Electronics

The main advantage of trading using opposite Hota Industrial and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hota Industrial 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 Hota Industrial Mfg and Delta Electronics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.