Correlation Between Delta Electronics and Richy Place

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

By analyzing existing cross correlation between Delta Electronics Public and Richy Place 2002, you can compare the effects of market volatilities on Delta Electronics and Richy Place 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 Richy Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Richy Place.

Diversification Opportunities for Delta Electronics and Richy Place

-0.86

Correlation Coefficient

Delta Electronics  Richy Place

Pay attention - limited upside

The 3 months correlation between Delta and Richy is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Richy Place 2002 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richy Place 2002 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 Public are associated (or correlated) with Richy Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richy Place 2002 has no effect on the direction of Delta Electronics i.e., Delta Electronics and Richy Place go up and down completely randomly.

Pair Corralation between Delta Electronics and Richy Place

Assuming the 90 days trading horizon Delta Electronics is expected to generate 11.49 times less return on investment than Richy Place. But when comparing it to its historical volatility, Delta Electronics Public is 13.96 times less risky than Richy Place. It trades about 0.05 of its potential returns per unit of risk. Richy Place 2002 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  77.00  in Richy Place 2002 on September 24, 2024 and sell it today you would lose (37.00) from holding Richy Place 2002 or give up 48.05% of portfolio value over 90 days.

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

Delta Electronics Public  vs.  Richy Place 2002

Delta Electronics Public

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Delta Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Richy Place 2002

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Richy Place 2002 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Delta Electronics and Richy Place

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

The idea behind Delta Electronics Public and Richy Place 2002 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.