Correlation Between Delta Electronics and Eureka Design

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

Diversification Opportunities for Delta Electronics and Eureka Design

0.29

Correlation Coefficient

Delta Electronics  Eureka Design

Modest diversification

The 3 months correlation between Delta and Eureka is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design 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 Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of Delta Electronics i.e., Delta Electronics and Eureka Design go up and down completely randomly.

Pair Corralation between Delta Electronics and Eureka Design

Assuming the 90 days trading horizon Delta Electronics is expected to generate 3.91 times less return on investment than Eureka Design. But when comparing it to its historical volatility, Delta Electronics Public is 2.58 times less risky than Eureka Design. It trades about 0.13 of its potential returns per unit of risk. Eureka Design Public is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Eureka Design Public on December 2, 2024 and sell it today you would earn a total of  32.00  from holding Eureka Design Public or generate 49.23% return on investment over 90 days.

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

Delta Electronics Public  vs.  Eureka Design Public

Delta Electronics Public

Risk-Adjusted Performance

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eureka Design Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Design Public are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Eureka Design sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Electronics and Eureka Design

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

The idea behind Delta Electronics Public and Eureka Design 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.