Correlation Between Coretronic and Delta Electronics

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

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

Diversification Opportunities for Coretronic and Delta Electronics

0.38

Correlation Coefficient

Coretronic  Delta Electronics

Weak diversification

The 3 months correlation between Coretronic and Delta is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Coretronic and Delta Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics and Coretronic 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 Coretronic 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 has no effect on the direction of Coretronic i.e., Coretronic and Delta Electronics go up and down completely randomly.

Pair Corralation between Coretronic and Delta Electronics

Assuming the 90 days trading horizon Coretronic is expected to generate 1.27 times more return on investment than Delta Electronics. However, Coretronic is 1.27 times more volatile than Delta Electronics. It trades about 0.06 of its potential returns per unit of risk. Delta Electronics is currently generating about 0.06 per unit of risk. If you would invest  5,265  in Coretronic on September 26, 2024 and sell it today you would earn a total of  3,655  from holding Coretronic or generate 69.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Coretronic  vs.  Delta Electronics

Coretronic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coretronic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Coretronic showed solid returns over the last few months and may actually be approaching a breakup point.

Delta Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Delta Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Coretronic and Delta Electronics

The main advantage of trading using opposite Coretronic and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coretronic 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 Coretronic and Delta Electronics 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 Global Correlations module to find global opportunities by holding instruments from different markets.