Correlation Between DelphX Capital and Parex Resources

Can any of the company-specific risk be diversified away by investing in both DelphX Capital and Parex Resources 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 DelphX Capital and Parex Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DelphX Capital Markets and Parex Resources, you can compare the effects of market volatilities on DelphX Capital and Parex Resources 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 DelphX Capital with a short position of Parex Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of DelphX Capital and Parex Resources.

Diversification Opportunities for DelphX Capital and Parex Resources

-0.61

Correlation Coefficient

DelphX Capital  Parex Resources

Excellent diversification

The 3 months correlation between DelphX and Parex is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding DelphX Capital Markets and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources and DelphX Capital 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 DelphX Capital Markets are associated (or correlated) with Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of DelphX Capital i.e., DelphX Capital and Parex Resources go up and down completely randomly.

Pair Corralation between DelphX Capital and Parex Resources

Assuming the 90 days trading horizon DelphX Capital Markets is expected to under-perform the Parex Resources. In addition to that, DelphX Capital is 3.03 times more volatile than Parex Resources. It trades about -0.05 of its total potential returns per unit of risk. Parex Resources is currently generating about 0.07 per unit of volatility. If you would invest  1,253  in Parex Resources on September 26, 2024 and sell it today you would earn a total of  70.00  from holding Parex Resources or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

DelphX Capital Markets  vs.  Parex Resources

DelphX Capital Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Parex Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Parex Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Parex Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DelphX Capital and Parex Resources

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

The idea behind DelphX Capital Markets and Parex Resources 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.