Correlation Between Delta Electronics and Tang Eng

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

By analyzing existing cross correlation between Delta Electronics and Tang Eng Iron, you can compare the effects of market volatilities on Delta Electronics and Tang Eng 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 Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Tang Eng.

Diversification Opportunities for Delta Electronics and Tang Eng

-0.83

Correlation Coefficient

Delta Electronics  Tang Eng

Pay attention - limited upside

The 3 months correlation between Delta and Tang is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron 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 Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Delta Electronics i.e., Delta Electronics and Tang Eng go up and down completely randomly.

Pair Corralation between Delta Electronics and Tang Eng

Assuming the 90 days trading horizon Delta Electronics is expected to generate 2.27 times more return on investment than Tang Eng. However, Delta Electronics is 2.27 times more volatile than Tang Eng Iron. It trades about 0.04 of its potential returns per unit of risk. Tang Eng Iron is currently generating about -0.01 per unit of risk. If you would invest  33,150  in Delta Electronics on October 4, 2024 and sell it today you would earn a total of  8,550  from holding Delta Electronics or generate 25.79% return on investment over 90 days.

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

Delta Electronics  vs.  Tang Eng Iron

Delta Electronics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Delta Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Tang Eng Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tang Eng Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Delta Electronics and Tang Eng

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

The idea behind Delta Electronics and Tang Eng Iron 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.