Correlation Between Delta Manufacturing and Akums Drugs

Can any of the company-specific risk be diversified away by investing in both Delta Manufacturing and Akums Drugs 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 Manufacturing and Akums Drugs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delta Manufacturing Limited and Akums Drugs and, you can compare the effects of market volatilities on Delta Manufacturing and Akums Drugs 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 Manufacturing with a short position of Akums Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Manufacturing and Akums Drugs.

Diversification Opportunities for Delta Manufacturing and Akums Drugs

0.83

Correlation Coefficient

Delta Manufacturing  Akums Drugs

Very poor diversification

The 3 months correlation between Delta and Akums is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Delta Manufacturing Limited and Akums Drugs and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akums Drugs and Delta Manufacturing 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 Manufacturing Limited are associated (or correlated) with Akums Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akums Drugs has no effect on the direction of Delta Manufacturing i.e., Delta Manufacturing and Akums Drugs go up and down completely randomly.

Pair Corralation between Delta Manufacturing and Akums Drugs

Assuming the 90 days trading horizon Delta Manufacturing Limited is expected to under-perform the Akums Drugs. In addition to that, Delta Manufacturing is 1.25 times more volatile than Akums Drugs and. It trades about -0.23 of its total potential returns per unit of risk. Akums Drugs and is currently generating about -0.13 per unit of volatility. If you would invest  60,765  in Akums Drugs and on December 26, 2024 and sell it today you would lose (13,670) from holding Akums Drugs and or give up 22.5% of portfolio value over 90 days.

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

Delta Manufacturing Limited  vs.  Akums Drugs and

Delta Manufacturing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Manufacturing Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators 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.

Akums Drugs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akums Drugs and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Delta Manufacturing and Akums Drugs

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

The idea behind Delta Manufacturing Limited and Akums Drugs and 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.