Correlation Between Knight Club and Delta Electronics

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

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

Diversification Opportunities for Knight Club and Delta Electronics

-0.18

Correlation Coefficient

Knight Club  Delta Electronics

Good diversification

The 3 months correlation between Knight and Delta is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Knight Club Capital 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 Knight Club 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 Knight Club Capital 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 Knight Club i.e., Knight Club and Delta Electronics go up and down completely randomly.

Pair Corralation between Knight Club and Delta Electronics

Assuming the 90 days trading horizon Knight Club Capital is expected to under-perform the Delta Electronics. In addition to that, Knight Club is 1.05 times more volatile than Delta Electronics Public. It trades about -0.04 of its total potential returns per unit of risk. Delta Electronics Public is currently generating about 0.06 per unit of volatility. If you would invest  5,814  in Delta Electronics Public on September 4, 2024 and sell it today you would earn a total of  9,286  from holding Delta Electronics Public or generate 159.72% return on investment over 90 days.

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

Knight Club Capital  vs.  Delta Electronics Public

Knight Club Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Club Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Knight Club may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Delta Electronics Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knight Club and Delta Electronics

The main advantage of trading using opposite Knight Club and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Club 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 Knight Club Capital 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 CEOs Directory module to screen CEOs from public companies around the world.