Correlation Between Delta Electronics and Asia Biomass

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Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Asia Biomass 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 Electronics and Asia Biomass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Electronics Public and Asia Biomass Public, you can compare the effects of market volatilities on Delta Electronics and Asia Biomass 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 Electronics with a short position of Asia Biomass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Asia Biomass.

Diversification Opportunities for Delta Electronics and Asia Biomass

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Delta and Asia is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Asia Biomass Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Biomass Public and Delta Electronics 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 Electronics Public are associated (or correlated) with Asia Biomass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Biomass Public has no effect on the direction of Delta Electronics i.e., Delta Electronics and Asia Biomass go up and down completely randomly.

Pair Corralation between Delta Electronics and Asia Biomass

Assuming the 90 days trading horizon Delta Electronics is expected to generate 6.88 times less return on investment than Asia Biomass. But when comparing it to its historical volatility, Delta Electronics Public is 11.43 times less risky than Asia Biomass. It trades about 0.06 of its potential returns per unit of risk. Asia Biomass Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Asia Biomass Public on September 29, 2024 and sell it today you would lose (81.00) from holding Asia Biomass Public or give up 42.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Delta Electronics Public  vs.  Asia Biomass Public

 Performance 
       Timeline  
Delta Electronics Public 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
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.
Asia Biomass Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Asia Biomass Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Delta Electronics and Asia Biomass Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Delta Electronics and Asia Biomass

The main advantage of trading using opposite Delta Electronics and Asia Biomass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics position performs unexpectedly, Asia Biomass 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 Asia Biomass will offset losses from the drop in Asia Biomass' long position.
The idea behind Delta Electronics Public and Asia Biomass 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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