Correlation Between Wellell and Delpha Construction

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

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

Diversification Opportunities for Wellell and Delpha Construction

-0.3

Correlation Coefficient

Wellell  Delpha Construction

Very good diversification

The 3 months correlation between Wellell and Delpha is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wellell and Delpha Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delpha Construction and Wellell 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 Wellell 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 Wellell i.e., Wellell and Delpha Construction go up and down completely randomly.

Pair Corralation between Wellell and Delpha Construction

Assuming the 90 days trading horizon Wellell is expected to under-perform the Delpha Construction. But the stock apears to be less risky and, when comparing its historical volatility, Wellell is 1.44 times less risky than Delpha Construction. The stock trades about -0.01 of its potential returns per unit of risk. The Delpha Construction Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,720  in Delpha Construction Co on October 4, 2024 and sell it today you would earn a total of  2,180  from holding Delpha Construction Co or generate 126.74% return on investment over 90 days.

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

Wellell  vs.  Delpha Construction Co

Wellell

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wellell and Delpha Construction

The main advantage of trading using opposite Wellell and Delpha Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wellell 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 Wellell 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 CEOs Directory module to screen CEOs from public companies around the world.