Correlation Between Delta Electronics and Wayi International

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

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

Diversification Opportunities for Delta Electronics and Wayi International

-0.25

Correlation Coefficient

Delta Electronics  Wayi International

Very good diversification

The 3 months correlation between Delta and Wayi is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Wayi International Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayi International 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 Wayi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayi International has no effect on the direction of Delta Electronics i.e., Delta Electronics and Wayi International go up and down completely randomly.

Pair Corralation between Delta Electronics and Wayi International

Assuming the 90 days trading horizon Delta Electronics is expected to generate 2.0 times less return on investment than Wayi International. But when comparing it to its historical volatility, Delta Electronics is 1.96 times less risky than Wayi International. It trades about 0.05 of its potential returns per unit of risk. Wayi International Digital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,090  in Wayi International Digital on October 9, 2024 and sell it today you would earn a total of  6,460  from holding Wayi International Digital or generate 79.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Delta Electronics  vs.  Wayi International Digital

Delta Electronics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Delta Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wayi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wayi International Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Delta Electronics and Wayi International

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

The idea behind Delta Electronics and Wayi International Digital 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.