Correlation Between Delta Electronics and AzureWave Technologies

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

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

Diversification Opportunities for Delta Electronics and AzureWave Technologies

-0.44

Correlation Coefficient

Delta Electronics  AzureWave Technologies

Very good diversification

The 3 months correlation between Delta and AzureWave is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and AzureWave Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AzureWave Technologies 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 AzureWave Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AzureWave Technologies has no effect on the direction of Delta Electronics i.e., Delta Electronics and AzureWave Technologies go up and down completely randomly.

Pair Corralation between Delta Electronics and AzureWave Technologies

Assuming the 90 days trading horizon Delta Electronics is expected to under-perform the AzureWave Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Delta Electronics is 1.56 times less risky than AzureWave Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The AzureWave Technologies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,800  in AzureWave Technologies on December 25, 2024 and sell it today you would lose (180.00) from holding AzureWave Technologies or give up 3.1% of portfolio value over 90 days.

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

Delta Electronics  vs.  AzureWave Technologies

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 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.

AzureWave Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days AzureWave Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AzureWave Technologies 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 AzureWave Technologies

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

The idea behind Delta Electronics and AzureWave Technologies 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.