Correlation Between Eestech and Delta CleanTech

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

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

Diversification Opportunities for Eestech and Delta CleanTech

0.62

Correlation Coefficient

Eestech  Delta CleanTech

Poor diversification

The 3 months correlation between Eestech and Delta is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eestech and Delta CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta CleanTech and Eestech 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 Eestech are associated (or correlated) with Delta CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta CleanTech has no effect on the direction of Eestech i.e., Eestech and Delta CleanTech go up and down completely randomly.

Pair Corralation between Eestech and Delta CleanTech

Given the investment horizon of 90 days Eestech is expected to under-perform the Delta CleanTech. In addition to that, Eestech is 1.07 times more volatile than Delta CleanTech. It trades about -0.12 of its total potential returns per unit of risk. Delta CleanTech is currently generating about 0.0 per unit of volatility. If you would invest  2.40  in Delta CleanTech on September 25, 2024 and sell it today you would lose (0.80) from holding Delta CleanTech or give up 33.33% of portfolio value over 90 days.

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

Eestech  vs.  Delta CleanTech

Eestech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eestech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Delta CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Delta CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eestech and Delta CleanTech

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

The idea behind Eestech and Delta CleanTech 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.