Correlation Between Delta Electronics and Orient Semiconductor

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

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

Diversification Opportunities for Delta Electronics and Orient Semiconductor

-0.52

Correlation Coefficient

Delta Electronics  Orient Semiconductor

Excellent diversification

The 3 months correlation between Delta and Orient is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Orient Semiconductor Electroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Semiconductor 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 Orient Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Semiconductor has no effect on the direction of Delta Electronics i.e., Delta Electronics and Orient Semiconductor go up and down completely randomly.

Pair Corralation between Delta Electronics and Orient Semiconductor

Assuming the 90 days trading horizon Delta Electronics is expected to under-perform the Orient Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Delta Electronics is 1.02 times less risky than Orient Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Orient Semiconductor Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,460  in Orient Semiconductor Electronics on December 23, 2024 and sell it today you would earn a total of  220.00  from holding Orient Semiconductor Electronics or generate 6.36% return on investment over 90 days.

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

Delta Electronics  vs.  Orient Semiconductor Electroni

Delta Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Orient Semiconductor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Semiconductor Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orient Semiconductor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Delta Electronics and Orient Semiconductor

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

The idea behind Delta Electronics and Orient Semiconductor Electronics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..