Correlation Between Delta Air and YTL Berhad

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

Diversification Opportunities for Delta Air and YTL Berhad

0.0

Correlation Coefficient

Delta Air  YTL Berhad

Pay attention - limited upside

The 3 months correlation between Delta and YTL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and YTL Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YTL Berhad 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 YTL Berhad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YTL Berhad has no effect on the direction of Delta Air i.e., Delta Air and YTL Berhad go up and down completely randomly.

Pair Corralation between Delta Air and YTL Berhad

Considering the 90-day investment horizon Delta Air is expected to generate 1.94 times less return on investment than YTL Berhad. But when comparing it to its historical volatility, Delta Air Lines is 2.05 times less risky than YTL Berhad. It trades about 0.06 of its potential returns per unit of risk. YTL Berhad is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  22.00  in YTL Berhad on October 22, 2024 and sell it today you would earn a total of  28.00  from holding YTL Berhad or generate 127.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Delta Air Lines  vs.  YTL Berhad

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.

YTL Berhad

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YTL Berhad are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, YTL Berhad may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Delta Air and YTL Berhad

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

The idea behind Delta Air Lines and YTL Berhad 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.