Correlation Between Delek Drilling and Chongqing Rural

Can any of the company-specific risk be diversified away by investing in both Delek Drilling and Chongqing Rural 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 Delek Drilling and Chongqing Rural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Drilling and Chongqing Rural Commercial, you can compare the effects of market volatilities on Delek Drilling and Chongqing Rural 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 Delek Drilling with a short position of Chongqing Rural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and Chongqing Rural.

Diversification Opportunities for Delek Drilling and Chongqing Rural

0.36

Correlation Coefficient

Delek Drilling  Chongqing Rural

Weak diversification

The 3 months correlation between Delek and Chongqing is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Chongqing Rural Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Rural Comm and Delek Drilling 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 Delek Drilling are associated (or correlated) with Chongqing Rural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Rural Comm has no effect on the direction of Delek Drilling i.e., Delek Drilling and Chongqing Rural go up and down completely randomly.

Pair Corralation between Delek Drilling and Chongqing Rural

If you would invest  327.00  in Delek Drilling on October 22, 2024 and sell it today you would earn a total of  11.00  from holding Delek Drilling or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Delek Drilling   vs.  Chongqing Rural Commercial

Delek Drilling

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Chongqing Rural Comm

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Rural Commercial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Chongqing Rural showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Drilling and Chongqing Rural

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

The idea behind Delek Drilling and Chongqing Rural Commercial 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.