Correlation Between Delta Electronics and ESSILORLUXOTTICA

Can any of the company-specific risk be diversified away by investing in both Delta Electronics and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Delta Electronics and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and ESSILORLUXOTTICA.

Diversification Opportunities for Delta Electronics and ESSILORLUXOTTICA

0.88

Correlation Coefficient

Delta Electronics  ESSILORLUXOTTICA

Very poor diversification

The 3 months correlation between Delta and ESSILORLUXOTTICA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Delta Electronics i.e., Delta Electronics and ESSILORLUXOTTICA go up and down completely randomly.

Pair Corralation between Delta Electronics and ESSILORLUXOTTICA

Assuming the 90 days trading horizon Delta Electronics Public is expected to generate 2.62 times more return on investment than ESSILORLUXOTTICA. However, Delta Electronics is 2.62 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.15 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.11 per unit of risk. If you would invest  292.00  in Delta Electronics Public on October 9, 2024 and sell it today you would earn a total of  96.00  from holding Delta Electronics Public or generate 32.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Delta Electronics Public  vs.  ESSILORLUXOTTICA 12ON

Delta Electronics Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

ESSILORLUXOTTICA 12ON

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESSILORLUXOTTICA 12ON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, ESSILORLUXOTTICA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Delta Electronics and ESSILORLUXOTTICA

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

The idea behind Delta Electronics Public and ESSILORLUXOTTICA 12ON 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..