Correlation Between Delta Electronics and Samart Public

Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Samart Public 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 Samart Public 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 Samart Public, you can compare the effects of market volatilities on Delta Electronics and Samart Public 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 Samart Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Samart Public.

Diversification Opportunities for Delta Electronics and Samart Public

0.66

Correlation Coefficient

Delta Electronics  Samart Public

Poor diversification

The 3 months correlation between Delta and Samart is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Samart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Public 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 Samart Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Public has no effect on the direction of Delta Electronics i.e., Delta Electronics and Samart Public go up and down completely randomly.

Pair Corralation between Delta Electronics and Samart Public

Assuming the 90 days trading horizon Delta Electronics is expected to generate 12.71 times less return on investment than Samart Public. But when comparing it to its historical volatility, Delta Electronics Public is 32.34 times less risky than Samart Public. It trades about 0.21 of its potential returns per unit of risk. Samart Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  570.00  in Samart Public on September 14, 2024 and sell it today you would earn a total of  145.00  from holding Samart Public or generate 25.44% return on investment over 90 days.

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

Delta Electronics Public  vs.  Samart Public

Delta Electronics Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 18 (%) 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.

Samart Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Samart Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delta Electronics and Samart Public

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

The idea behind Delta Electronics Public and Samart Public 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.