Correlation Between VERTIV HOLCL and Delta Electronics

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

By analyzing existing cross correlation between VERTIV HOLCL A and Delta Electronics Public, you can compare the effects of market volatilities on VERTIV HOLCL and Delta Electronics 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 VERTIV HOLCL with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VERTIV HOLCL and Delta Electronics.

Diversification Opportunities for VERTIV HOLCL and Delta Electronics

0.87

Correlation Coefficient

VERTIV HOLCL  Delta Electronics

Very poor diversification

The 3 months correlation between VERTIV and Delta is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VERTIV HOLCL A and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public and VERTIV HOLCL 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 VERTIV HOLCL A are associated (or correlated) with Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of VERTIV HOLCL i.e., VERTIV HOLCL and Delta Electronics go up and down completely randomly.

Pair Corralation between VERTIV HOLCL and Delta Electronics

Assuming the 90 days horizon VERTIV HOLCL A is expected to generate 1.02 times more return on investment than Delta Electronics. However, VERTIV HOLCL is 1.02 times more volatile than Delta Electronics Public. It trades about -0.1 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.2 per unit of risk. If you would invest  10,877  in VERTIV HOLCL A on December 29, 2024 and sell it today you would lose (4,147) from holding VERTIV HOLCL A or give up 38.13% of portfolio value over 90 days.

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

VERTIV HOLCL A  vs.  Delta Electronics Public

VERTIV HOLCL A

Risk-Adjusted Performance

Very Weak

Over the last 90 days VERTIV HOLCL A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Delta Electronics Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VERTIV HOLCL and Delta Electronics

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

The idea behind VERTIV HOLCL A and Delta Electronics Public 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.