Correlation Between Vow ASA and Delta CleanTech

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

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

Diversification Opportunities for Vow ASA and Delta CleanTech

0.58

Correlation Coefficient

Vow ASA  Delta CleanTech

Very weak diversification

The 3 months correlation between Vow and Delta is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Delta CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta CleanTech and Vow ASA 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 Vow ASA 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 Vow ASA i.e., Vow ASA and Delta CleanTech go up and down completely randomly.

Pair Corralation between Vow ASA and Delta CleanTech

Assuming the 90 days horizon Vow ASA is expected to under-perform the Delta CleanTech. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vow ASA is 2.52 times less risky than Delta CleanTech. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Delta CleanTech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.67  in Delta CleanTech on September 4, 2024 and sell it today you would lose (1.09) from holding Delta CleanTech or give up 40.82% of portfolio value over 90 days.

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

Vow ASA  vs.  Delta CleanTech

Vow ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vow ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vow ASA and Delta CleanTech

The main advantage of trading using opposite Vow ASA and Delta CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA 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 Vow ASA 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.