Correlation Between Delta Asia and BenQ Medical

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

By analyzing existing cross correlation between Delta Asia International and BenQ Medical Technology, you can compare the effects of market volatilities on Delta Asia and BenQ Medical 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 Asia with a short position of BenQ Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Asia and BenQ Medical.

Diversification Opportunities for Delta Asia and BenQ Medical

0.82

Correlation Coefficient

Delta Asia  BenQ Medical

Very poor diversification

The 3 months correlation between Delta and BenQ is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Delta Asia International and BenQ Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Medical Technology and Delta Asia 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 Asia International are associated (or correlated) with BenQ Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Medical Technology has no effect on the direction of Delta Asia i.e., Delta Asia and BenQ Medical go up and down completely randomly.

Pair Corralation between Delta Asia and BenQ Medical

Assuming the 90 days trading horizon Delta Asia International is expected to generate 0.97 times more return on investment than BenQ Medical. However, Delta Asia International is 1.03 times less risky than BenQ Medical. It trades about 0.0 of its potential returns per unit of risk. BenQ Medical Technology is currently generating about -0.04 per unit of risk. If you would invest  28,200  in Delta Asia International on September 12, 2024 and sell it today you would lose (400.00) from holding Delta Asia International or give up 1.42% of portfolio value over 90 days.

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

Delta Asia International  vs.  BenQ Medical Technology

Delta Asia International

Risk-Adjusted Performance

0 of 100

Very Weak

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

BenQ Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BenQ Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, BenQ Medical 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 Delta Asia and BenQ Medical

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

The idea behind Delta Asia International and BenQ Medical Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.