Correlation Between Delta Electronics and Chevron

Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Chevron 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 Chevron 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 Chevron, you can compare the effects of market volatilities on Delta Electronics and Chevron 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 Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Chevron.

Diversification Opportunities for Delta Electronics and Chevron

0.57

Correlation Coefficient

Delta Electronics  Chevron

Very weak diversification

The 3 months correlation between Delta and Chevron is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Delta Electronics i.e., Delta Electronics and Chevron go up and down completely randomly.

Pair Corralation between Delta Electronics and Chevron

Assuming the 90 days trading horizon Delta Electronics Public is expected to generate 2.78 times more return on investment than Chevron. However, Delta Electronics is 2.78 times more volatile than Chevron. It trades about 0.13 of its potential returns per unit of risk. Chevron is currently generating about 0.09 per unit of risk. If you would invest  312.00  in Delta Electronics Public on October 11, 2024 and sell it today you would earn a total of  82.00  from holding Delta Electronics Public or generate 26.28% return on investment over 90 days.

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

Delta Electronics Public  vs.  Chevron

Delta Electronics Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Chevron

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Chevron may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Delta Electronics and Chevron

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

The idea behind Delta Electronics Public and Chevron 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.