Correlation Between Delta Air and PowerCell Sweden

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

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

Diversification Opportunities for Delta Air and PowerCell Sweden

0.12

Correlation Coefficient

Delta Air  PowerCell Sweden

Average diversification

The 3 months correlation between Delta and PowerCell is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and PowerCell Sweden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerCell Sweden and Delta Air 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 Delta Air Lines are associated (or correlated) with PowerCell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerCell Sweden has no effect on the direction of Delta Air i.e., Delta Air and PowerCell Sweden go up and down completely randomly.

Pair Corralation between Delta Air and PowerCell Sweden

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.47 times more return on investment than PowerCell Sweden. However, Delta Air Lines is 2.12 times less risky than PowerCell Sweden. It trades about 0.19 of its potential returns per unit of risk. PowerCell Sweden AB is currently generating about 0.07 per unit of risk. If you would invest  4,637  in Delta Air Lines on September 17, 2024 and sell it today you would earn a total of  1,502  from holding Delta Air Lines or generate 32.39% return on investment over 90 days.

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

Delta Air Lines  vs.  PowerCell Sweden AB

Delta Air Lines

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Delta Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

PowerCell Sweden

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PowerCell Sweden AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PowerCell Sweden unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and PowerCell Sweden

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

The idea behind Delta Air Lines and PowerCell Sweden AB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.