Correlation Between Delek Energy and Kunlun Energy

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

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

Diversification Opportunities for Delek Energy and Kunlun Energy

-0.06

Correlation Coefficient

Delek Energy  Kunlun Energy

Good diversification

The 3 months correlation between Delek and Kunlun is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Kunlun Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunlun Energy 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 Kunlun Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunlun Energy has no effect on the direction of Delek Energy i.e., Delek Energy and Kunlun Energy go up and down completely randomly.

Pair Corralation between Delek Energy and Kunlun Energy

Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the Kunlun Energy. But the stock apears to be less risky and, when comparing its historical volatility, Delek Energy is 1.18 times less risky than Kunlun Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Kunlun Energy Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  980.00  in Kunlun Energy Co on September 21, 2024 and sell it today you would earn a total of  98.00  from holding Kunlun Energy Co or generate 10.0% return on investment over 90 days.

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

Delek Energy  vs.  Kunlun Energy 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.

Kunlun Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kunlun Energy Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Kunlun Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Energy and Kunlun Energy

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

The idea behind Delek Energy and Kunlun Energy 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.