Correlation Between Delta Air and OCBCSP

Can any of the company-specific risk be diversified away by investing in both Delta Air and OCBCSP 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 OCBCSP 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 OCBCSP 1832 10 SEP 30, you can compare the effects of market volatilities on Delta Air and OCBCSP 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 OCBCSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and OCBCSP.

Diversification Opportunities for Delta Air and OCBCSP

0.57

Correlation Coefficient

Delta Air  OCBCSP

Very weak diversification

The 3 months correlation between Delta and OCBCSP is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and OCBCSP 1832 10 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBCSP 1832 10 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 OCBCSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBCSP 1832 10 has no effect on the direction of Delta Air i.e., Delta Air and OCBCSP go up and down completely randomly.

Pair Corralation between Delta Air and OCBCSP

Considering the 90-day investment horizon Delta Air Lines is expected to generate 2.3 times more return on investment than OCBCSP. However, Delta Air is 2.3 times more volatile than OCBCSP 1832 10 SEP 30. It trades about 0.06 of its potential returns per unit of risk. OCBCSP 1832 10 SEP 30 is currently generating about 0.09 per unit of risk. If you would invest  3,928  in Delta Air Lines on October 24, 2024 and sell it today you would earn a total of  2,830  from holding Delta Air Lines or generate 72.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	18.83%
Values	Daily Returns

Delta Air Lines  vs.  OCBCSP 1832 10 SEP 30

Delta Air Lines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 13 (%) 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.

OCBCSP 1832 10

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days OCBCSP 1832 10 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, OCBCSP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and OCBCSP

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

The idea behind Delta Air Lines and OCBCSP 1832 10 SEP 30 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.