Correlation Between Delta Electronics and Centara Hotels

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

Diversification Opportunities for Delta Electronics and Centara Hotels

0.03

Correlation Coefficient

Delta Electronics  Centara Hotels

Significant diversification

The 3 months correlation between Delta and Centara is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Centara Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centara Hotels Resorts 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 Centara Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centara Hotels Resorts has no effect on the direction of Delta Electronics i.e., Delta Electronics and Centara Hotels go up and down completely randomly.

Pair Corralation between Delta Electronics and Centara Hotels

Assuming the 90 days trading horizon Delta Electronics Public is expected to under-perform the Centara Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Delta Electronics Public is 30.43 times less risky than Centara Hotels. The stock trades about -0.24 of its potential returns per unit of risk. The Centara Hotels Resorts is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  441.00  in Centara Hotels Resorts on December 1, 2024 and sell it today you would lose (3.00) from holding Centara Hotels Resorts or give up 0.68% of portfolio value over 90 days.

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

Delta Electronics Public  vs.  Centara Hotels Resorts

Delta Electronics Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Centara Hotels Resorts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centara Hotels Resorts are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centara Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Electronics and Centara Hotels

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

The idea behind Delta Electronics Public and Centara Hotels Resorts 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.