Correlation Between Delta Air and SYSTEMAIR

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

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

Diversification Opportunities for Delta Air and SYSTEMAIR

-0.1

Correlation Coefficient

Delta Air  SYSTEMAIR

Good diversification

The 3 months correlation between Delta and SYSTEMAIR is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and Delta Air 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 Air Lines are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Delta Air i.e., Delta Air and SYSTEMAIR go up and down completely randomly.

Pair Corralation between Delta Air and SYSTEMAIR

Assuming the 90 days horizon Delta Air Lines is expected to under-perform the SYSTEMAIR. In addition to that, Delta Air is 1.48 times more volatile than SYSTEMAIR AB. It trades about -0.15 of its total potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.01 per unit of volatility. If you would invest  768.00  in SYSTEMAIR AB on December 22, 2024 and sell it today you would lose (18.00) from holding SYSTEMAIR AB or give up 2.34% of portfolio value over 90 days.

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

Delta Air Lines  vs.  SYSTEMAIR AB

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines 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.

SYSTEMAIR AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Delta Air and SYSTEMAIR

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

The idea behind Delta Air Lines and SYSTEMAIR AB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.