Correlation Between CHUWIT FARM and Delta Electronics

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

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

Diversification Opportunities for CHUWIT FARM and Delta Electronics

-0.14

Correlation Coefficient

CHUWIT FARM  Delta Electronics

Good diversification

The 3 months correlation between CHUWIT and Delta is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CHUWIT FARM 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 CHUWIT FARM 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 CHUWIT FARM 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 CHUWIT FARM i.e., CHUWIT FARM and Delta Electronics go up and down completely randomly.

Pair Corralation between CHUWIT FARM and Delta Electronics

Assuming the 90 days trading horizon CHUWIT FARM PUBLIC is expected to under-perform the Delta Electronics. In addition to that, CHUWIT FARM is 1.85 times more volatile than Delta Electronics Public. It trades about -0.07 of its total potential returns per unit of risk. Delta Electronics Public is currently generating about 0.05 per unit of volatility. If you would invest  9,875  in Delta Electronics Public on October 24, 2024 and sell it today you would earn a total of  4,825  from holding Delta Electronics Public or generate 48.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.65%
Values	Daily Returns

CHUWIT FARM PUBLIC  vs.  Delta Electronics Public

CHUWIT FARM PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHUWIT FARM 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 fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Delta Electronics Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHUWIT FARM and Delta Electronics

The main advantage of trading using opposite CHUWIT FARM and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHUWIT FARM 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 CHUWIT FARM 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.