Correlation Between Delek Energy and Idemitsu Kosan

Can any of the company-specific risk be diversified away by investing in both Delek Energy and Idemitsu Kosan 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 Delek Energy and Idemitsu Kosan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Energy and Idemitsu Kosan Co, you can compare the effects of market volatilities on Delek Energy and Idemitsu Kosan 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 Delek Energy with a short position of Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and Idemitsu Kosan.

Diversification Opportunities for Delek Energy and Idemitsu Kosan

0.19

Correlation Coefficient

Delek Energy  Idemitsu Kosan

Average diversification

The 3 months correlation between Delek and Idemitsu is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Idemitsu Kosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan and Delek Energy 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 Delek Energy are associated (or correlated) with Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan has no effect on the direction of Delek Energy i.e., Delek Energy and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between Delek Energy and Idemitsu Kosan

Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the Idemitsu Kosan. But the stock apears to be less risky and, when comparing its historical volatility, Delek Energy is 1.14 times less risky than Idemitsu Kosan. The stock trades about -0.09 of its potential returns per unit of risk. The Idemitsu Kosan Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,400  in Idemitsu Kosan Co on September 18, 2024 and sell it today you would lose (89.00) from holding Idemitsu Kosan Co or give up 6.36% of portfolio value over 90 days.

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

Delek Energy  vs.  Idemitsu Kosan Co

Delek Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Energy 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Idemitsu Kosan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idemitsu Kosan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Idemitsu Kosan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delek Energy and Idemitsu Kosan

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

The idea behind Delek Energy and Idemitsu Kosan Co 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.