Correlation Between Asia Precision and Delta Electronics

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

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

Diversification Opportunities for Asia Precision and Delta Electronics

-0.51

Correlation Coefficient

Asia Precision  Delta Electronics

Excellent diversification

The 3 months correlation between Asia and Delta is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision Public 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 Asia Precision 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 Asia Precision Public 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 Asia Precision i.e., Asia Precision and Delta Electronics go up and down completely randomly.

Pair Corralation between Asia Precision and Delta Electronics

Assuming the 90 days trading horizon Asia Precision Public is expected to generate 1.01 times more return on investment than Delta Electronics. However, Asia Precision is 1.01 times more volatile than Delta Electronics Public. It trades about -0.08 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.08 per unit of risk. If you would invest  189.00  in Asia Precision Public on December 28, 2024 and sell it today you would lose (47.00) from holding Asia Precision Public or give up 24.87% of portfolio value over 90 days.

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

Asia Precision Public  vs.  Delta Electronics Public

Asia Precision Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Precision Public 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 forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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. 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Asia Precision and Delta Electronics

The main advantage of trading using opposite Asia Precision and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Precision 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 Asia Precision Public 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.