Correlation Between Delta Air and TravelSky Technology

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

By analyzing existing cross correlation between Delta Air Lines and TravelSky Technology Ltd, you can compare the effects of market volatilities on Delta Air and TravelSky Technology 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 Air with a short position of TravelSky Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and TravelSky Technology.

Diversification Opportunities for Delta Air and TravelSky Technology

-0.58

Correlation Coefficient

Delta Air  TravelSky Technology

Excellent diversification

The 3 months correlation between Delta and TravelSky is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and TravelSky Technology Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TravelSky Technology and Delta Air 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 Air Lines are associated (or correlated) with TravelSky Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TravelSky Technology has no effect on the direction of Delta Air i.e., Delta Air and TravelSky Technology go up and down completely randomly.

Pair Corralation between Delta Air and TravelSky Technology

Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.99 times more return on investment than TravelSky Technology. However, Delta Air Lines is 1.01 times less risky than TravelSky Technology. It trades about 0.16 of its potential returns per unit of risk. TravelSky Technology Ltd is currently generating about -0.22 per unit of risk. If you would invest  6,152  in Delta Air Lines on October 23, 2024 and sell it today you would earn a total of  430.00  from holding Delta Air Lines or generate 6.99% return on investment over 90 days.

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

Delta Air Lines  vs.  TravelSky Technology Ltd

Delta Air Lines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

TravelSky Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TravelSky Technology Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Delta Air and TravelSky Technology

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

The idea behind Delta Air Lines and TravelSky Technology Ltd 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.