Correlation Between DELTA AIR and Dermapharm Holding

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

Diversification Opportunities for DELTA AIR and Dermapharm Holding

0.28

Correlation Coefficient

DELTA AIR  Dermapharm Holding

Modest diversification

The 3 months correlation between DELTA and Dermapharm is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and Dermapharm Holding SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermapharm Holding 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 Dermapharm Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermapharm Holding has no effect on the direction of DELTA AIR i.e., DELTA AIR and Dermapharm Holding go up and down completely randomly.

Pair Corralation between DELTA AIR and Dermapharm Holding

Assuming the 90 days trading horizon DELTA AIR is expected to generate 1.0 times less return on investment than Dermapharm Holding. In addition to that, DELTA AIR is 1.18 times more volatile than Dermapharm Holding SE. It trades about 0.16 of its total potential returns per unit of risk. Dermapharm Holding SE is currently generating about 0.2 per unit of volatility. If you would invest  3,140  in Dermapharm Holding SE on October 23, 2024 and sell it today you would earn a total of  820.00  from holding Dermapharm Holding SE or generate 26.11% return on investment over 90 days.

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

DELTA AIR LINES  vs.  Dermapharm Holding SE

DELTA AIR LINES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DELTA AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dermapharm Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dermapharm Holding SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Dermapharm Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DELTA AIR and Dermapharm Holding

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

The idea behind DELTA AIR LINES and Dermapharm Holding SE 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.