Correlation Between Delta Electronics and Zeng Hsing

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

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

Diversification Opportunities for Delta Electronics and Zeng Hsing

0.47

Correlation Coefficient

Delta Electronics  Zeng Hsing

Very weak diversification

The 3 months correlation between Delta and Zeng is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Zeng Hsing Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeng Hsing Industrial and Delta Electronics 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 Electronics are associated (or correlated) with Zeng Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeng Hsing Industrial has no effect on the direction of Delta Electronics i.e., Delta Electronics and Zeng Hsing go up and down completely randomly.

Pair Corralation between Delta Electronics and Zeng Hsing

Assuming the 90 days trading horizon Delta Electronics is expected to generate 1.19 times less return on investment than Zeng Hsing. In addition to that, Delta Electronics is 1.49 times more volatile than Zeng Hsing Industrial. It trades about 0.04 of its total potential returns per unit of risk. Zeng Hsing Industrial is currently generating about 0.07 per unit of volatility. If you would invest  10,400  in Zeng Hsing Industrial on October 20, 2024 and sell it today you would earn a total of  200.00  from holding Zeng Hsing Industrial or generate 1.92% return on investment over 90 days.

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

Delta Electronics  vs.  Zeng Hsing Industrial

Delta Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Delta Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zeng Hsing Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zeng Hsing Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Zeng Hsing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Delta Electronics and Zeng Hsing

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

The idea behind Delta Electronics and Zeng Hsing Industrial 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.