Correlation Between Delta Electronics and Cayenne Entertainment

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

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

Diversification Opportunities for Delta Electronics and Cayenne Entertainment

-0.8

Correlation Coefficient

Delta Electronics  Cayenne Entertainment

Pay attention - limited upside

The 3 months correlation between Delta and Cayenne is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics and Cayenne Entertainment Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayenne Entertainment 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 Cayenne Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayenne Entertainment has no effect on the direction of Delta Electronics i.e., Delta Electronics and Cayenne Entertainment go up and down completely randomly.

Pair Corralation between Delta Electronics and Cayenne Entertainment

Assuming the 90 days trading horizon Delta Electronics is expected to under-perform the Cayenne Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Delta Electronics is 2.25 times less risky than Cayenne Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Cayenne Entertainment Technology is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3,775  in Cayenne Entertainment Technology on December 23, 2024 and sell it today you would earn a total of  6,125  from holding Cayenne Entertainment Technology or generate 162.25% 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.  Cayenne Entertainment Technolo

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.

Cayenne Entertainment

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cayenne Entertainment Technology are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cayenne Entertainment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Electronics and Cayenne Entertainment

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

The idea behind Delta Electronics and Cayenne Entertainment Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.