Correlation Between Motech Industries and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both Motech Industries 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 Motech Industries and Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motech Industries Co and Delta Electronics, you can compare the effects of market volatilities on Motech Industries 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 Motech Industries with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motech Industries and Delta Electronics.
Diversification Opportunities for Motech Industries and Delta Electronics
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Motech and Delta is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Motech Industries Co and Delta Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics and Motech Industries 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 Motech Industries Co 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 Motech Industries i.e., Motech Industries and Delta Electronics go up and down completely randomly.
Pair Corralation between Motech Industries and Delta Electronics
Assuming the 90 days trading horizon Motech Industries is expected to generate 1.85 times less return on investment than Delta Electronics. In addition to that, Motech Industries is 1.02 times more volatile than Delta Electronics. It trades about 0.05 of its total potential returns per unit of risk. Delta Electronics is currently generating about 0.1 per unit of volatility. If you would invest 36,450 in Delta Electronics on September 11, 2024 and sell it today you would earn a total of 4,050 from holding Delta Electronics or generate 11.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Motech Industries Co vs. Delta Electronics
Performance |
Timeline |
Motech Industries |
Delta Electronics |
Motech Industries and Delta Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Motech Industries and Delta Electronics
The main advantage of trading using opposite Motech Industries and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motech Industries 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.Motech Industries vs. United Renewable Energy | Motech Industries vs. Sino American Silicon Products | Motech Industries vs. Wafer Works | Motech Industries vs. Gigasolar Materials |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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