Correlation Between Delta Asia and SS Healthcare

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

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

Diversification Opportunities for Delta Asia and SS Healthcare

0.26

Correlation Coefficient

Delta Asia  SS Healthcare

Modest diversification

The 3 months correlation between Delta and 4198 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Delta Asia International and SS Healthcare Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS Healthcare Holding and Delta Asia 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 Asia International are associated (or correlated) with SS Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS Healthcare Holding has no effect on the direction of Delta Asia i.e., Delta Asia and SS Healthcare go up and down completely randomly.

Pair Corralation between Delta Asia and SS Healthcare

Assuming the 90 days trading horizon Delta Asia International is expected to under-perform the SS Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Delta Asia International is 2.84 times less risky than SS Healthcare. The stock trades about -0.13 of its potential returns per unit of risk. The SS Healthcare Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,140  in SS Healthcare Holding on October 6, 2024 and sell it today you would earn a total of  110.00  from holding SS Healthcare Holding or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Delta Asia International  vs.  SS Healthcare Holding

Delta Asia International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Asia International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

SS Healthcare Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SS Healthcare Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, SS Healthcare 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 Delta Asia and SS Healthcare

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

The idea behind Delta Asia International and SS Healthcare Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.