Correlation Between Energy Absolute and Delta Electronics

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

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

Diversification Opportunities for Energy Absolute and Delta Electronics

-0.78

Correlation Coefficient

Energy Absolute  Delta Electronics

Pay attention - limited upside

The 3 months correlation between Energy and Delta is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of Energy Absolute i.e., Energy Absolute and Delta Electronics go up and down completely randomly.

Pair Corralation between Energy Absolute and Delta Electronics

Assuming the 90 days horizon Energy Absolute Public is expected to under-perform the Delta Electronics. In addition to that, Energy Absolute is 2.32 times more volatile than Delta Electronics Public. It trades about -0.1 of its total potential returns per unit of risk. Delta Electronics Public is currently generating about 0.1 per unit of volatility. If you would invest  8,196  in Delta Electronics Public on September 14, 2024 and sell it today you would earn a total of  6,954  from holding Delta Electronics Public or generate 84.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.62%
Values	Daily Returns

Energy Absolute Public  vs.  Delta Electronics Public

Energy Absolute Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Absolute 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Delta Electronics Public

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Delta Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Absolute and Delta Electronics

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

The idea behind Energy Absolute Public and Delta Electronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.