Correlation Between Delek and Aran Research

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

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

Diversification Opportunities for Delek and Aran Research

-0.34

Correlation Coefficient

Delek  Aran Research

Very good diversification

The 3 months correlation between Delek and Aran is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Aran Research and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aran Research and Delek 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 Group are associated (or correlated) with Aran Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aran Research has no effect on the direction of Delek i.e., Delek and Aran Research go up and down completely randomly.

Pair Corralation between Delek and Aran Research

Assuming the 90 days trading horizon Delek Group is expected to generate 1.43 times more return on investment than Aran Research. However, Delek is 1.43 times more volatile than Aran Research and. It trades about 0.18 of its potential returns per unit of risk. Aran Research and is currently generating about 0.0 per unit of risk. If you would invest  4,170,000  in Delek Group on September 3, 2024 and sell it today you would earn a total of  703,000  from holding Delek Group or generate 16.86% return on investment over 90 days.

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

Delek Group  vs.  Aran Research and

Delek Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Delek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aran Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aran Research and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aran Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delek and Aran Research

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

The idea behind Delek Group and Aran Research 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.