Correlation Between DELTA AIR and SOGECLAIR

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

Diversification Opportunities for DELTA AIR and SOGECLAIR

-0.35

Correlation Coefficient

DELTA AIR  SOGECLAIR

Very good diversification

The 3 months correlation between DELTA and SOGECLAIR is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH 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 SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of DELTA AIR i.e., DELTA AIR and SOGECLAIR go up and down completely randomly.

Pair Corralation between DELTA AIR and SOGECLAIR

Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 1.16 times more return on investment than SOGECLAIR. However, DELTA AIR is 1.16 times more volatile than SOGECLAIR SA INH. It trades about 0.23 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about -0.01 per unit of risk. If you would invest  4,160  in DELTA AIR LINES on September 17, 2024 and sell it today you would earn a total of  1,696  from holding DELTA AIR LINES or generate 40.77% return on investment over 90 days.

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

DELTA AIR LINES  vs.  SOGECLAIR SA INH

DELTA AIR LINES

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DELTA AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGECLAIR SA INH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOGECLAIR 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 SOGECLAIR

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

The idea behind DELTA AIR LINES and SOGECLAIR SA INH 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.