Correlation Between Gem Terminal and Delpha Construction

Can any of the company-specific risk be diversified away by investing in both Gem Terminal and Delpha Construction 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 Gem Terminal and Delpha Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gem Terminal Industry and Delpha Construction Co, you can compare the effects of market volatilities on Gem Terminal and Delpha Construction 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 Gem Terminal with a short position of Delpha Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Terminal and Delpha Construction.

Diversification Opportunities for Gem Terminal and Delpha Construction

0.46

Correlation Coefficient

Gem Terminal  Delpha Construction

Very weak diversification

The 3 months correlation between Gem and Delpha is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gem Terminal Industry and Delpha Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delpha Construction and Gem Terminal 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 Gem Terminal Industry are associated (or correlated) with Delpha Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delpha Construction has no effect on the direction of Gem Terminal i.e., Gem Terminal and Delpha Construction go up and down completely randomly.

Pair Corralation between Gem Terminal and Delpha Construction

Assuming the 90 days trading horizon Gem Terminal Industry is expected to under-perform the Delpha Construction. In addition to that, Gem Terminal is 1.69 times more volatile than Delpha Construction Co. It trades about -0.16 of its total potential returns per unit of risk. Delpha Construction Co is currently generating about -0.04 per unit of volatility. If you would invest  3,905  in Delpha Construction Co on October 21, 2024 and sell it today you would lose (175.00) from holding Delpha Construction Co or give up 4.48% of portfolio value over 90 days.

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

Gem Terminal Industry  vs.  Delpha Construction Co

Gem Terminal Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gem Terminal Industry 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.

Delpha Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delpha Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Delpha Construction is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Gem Terminal and Delpha Construction

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

The idea behind Gem Terminal Industry and Delpha Construction Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.