Correlation Between NISSHA CO and Delta Electronics

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

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

Diversification Opportunities for NISSHA CO and Delta Electronics

-0.78

Correlation Coefficient

NISSHA CO  Delta Electronics

Pay attention - limited upside

The 3 months correlation between NISSHA and Delta is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NISSHA LTD 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 NISSHA CO 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 NISSHA LTD 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 NISSHA CO i.e., NISSHA CO and Delta Electronics go up and down completely randomly.

Pair Corralation between NISSHA CO and Delta Electronics

Assuming the 90 days horizon NISSHA LTD is expected to generate 0.32 times more return on investment than Delta Electronics. However, NISSHA LTD is 3.15 times less risky than Delta Electronics. It trades about 0.18 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.14 per unit of risk. If you would invest  960.00  in NISSHA LTD on October 9, 2024 and sell it today you would earn a total of  35.00  from holding NISSHA LTD or generate 3.65% return on investment over 90 days.

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

NISSHA LTD  vs.  Delta Electronics Public

NISSHA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSHA LTD 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Delta Electronics Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSHA CO and Delta Electronics

The main advantage of trading using opposite NISSHA CO and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSHA CO 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 NISSHA LTD 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.