Correlation Between Delta Electronics and TT Electronics

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

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

Diversification Opportunities for Delta Electronics and TT Electronics

0.74

Correlation Coefficient

Delta Electronics  TT Electronics

Poor diversification

The 3 months correlation between Delta and 7TT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC and Delta Electronics 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 Electronics Public are associated (or correlated) with TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of Delta Electronics i.e., Delta Electronics and TT Electronics go up and down completely randomly.

Pair Corralation between Delta Electronics and TT Electronics

Assuming the 90 days trading horizon Delta Electronics Public is expected to under-perform the TT Electronics. In addition to that, Delta Electronics is 2.88 times more volatile than TT Electronics PLC. It trades about -0.22 of its total potential returns per unit of risk. TT Electronics PLC is currently generating about -0.18 per unit of volatility. If you would invest  124.00  in TT Electronics PLC on December 21, 2024 and sell it today you would lose (24.00) from holding TT Electronics PLC or give up 19.35% of portfolio value over 90 days.

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

Delta Electronics Public  vs.  TT Electronics PLC

Delta Electronics Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TT Electronics PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days TT Electronics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Delta Electronics and TT Electronics

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

The idea behind Delta Electronics Public and TT Electronics PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.