Correlation Between Delfingen and BigBen Interactive

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

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

Diversification Opportunities for Delfingen and BigBen Interactive

0.73

Correlation Coefficient

Delfingen  BigBen Interactive

Poor diversification

The 3 months correlation between Delfingen and BigBen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Delfingen and BigBen Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBen Interactive and Delfingen 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 Delfingen are associated (or correlated) with BigBen Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBen Interactive has no effect on the direction of Delfingen i.e., Delfingen and BigBen Interactive go up and down completely randomly.

Pair Corralation between Delfingen and BigBen Interactive

Assuming the 90 days trading horizon Delfingen is expected to generate 1.22 times more return on investment than BigBen Interactive. However, Delfingen is 1.22 times more volatile than BigBen Interactive. It trades about 0.31 of its potential returns per unit of risk. BigBen Interactive is currently generating about -0.14 per unit of risk. If you would invest  1,155  in Delfingen on September 30, 2024 and sell it today you would earn a total of  210.00  from holding Delfingen or generate 18.18% return on investment over 90 days.

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

Delfingen  vs.  BigBen Interactive

Delfingen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delfingen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

BigBen Interactive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BigBen Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Delfingen and BigBen Interactive

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

The idea behind Delfingen and BigBen Interactive 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.