Correlation Between Delta Electronics and GlobalWafers

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

Diversification Opportunities for Delta Electronics and GlobalWafers

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Delta and GlobalWafers is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and GlobalWafers Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalWafers and Delta Electronics 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 Electronics are associated (or correlated) with GlobalWafers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalWafers has no effect on the direction of Delta Electronics i.e., Delta Electronics and GlobalWafers go up and down completely randomly.

Pair Corralation between Delta Electronics and GlobalWafers

Assuming the 90 days trading horizon Delta Electronics is expected to generate 9.78 times less return on investment than GlobalWafers. But when comparing it to its historical volatility, Delta Electronics is 1.83 times less risky than GlobalWafers. It trades about 0.01 of its potential returns per unit of risk. GlobalWafers Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  42,000  in GlobalWafers Co on September 5, 2024 and sell it today you would earn a total of  400.00  from holding GlobalWafers Co or generate 0.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Delta Electronics  vs.  GlobalWafers Co

 Performance 
       Timeline  
Delta Electronics 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Delta Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.
GlobalWafers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GlobalWafers Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GlobalWafers 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 and GlobalWafers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Delta Electronics and GlobalWafers

The main advantage of trading using opposite Delta Electronics and GlobalWafers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics position performs unexpectedly, GlobalWafers 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 GlobalWafers will offset losses from the drop in GlobalWafers' long position.
The idea behind Delta Electronics and GlobalWafers Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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