Correlation Between CANADA RARE and Delta Electronics

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

By analyzing existing cross correlation between CANADA RARE EARTH and Delta Electronics Public, you can compare the effects of market volatilities on CANADA RARE and Delta Electronics 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 CANADA RARE with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANADA RARE and Delta Electronics.

Diversification Opportunities for CANADA RARE and Delta Electronics

0.14

Correlation Coefficient

CANADA RARE  Delta Electronics

Average diversification

The 3 months correlation between CANADA and Delta is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CANADA RARE EARTH and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public and CANADA RARE 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 CANADA RARE EARTH are associated (or correlated) with Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of CANADA RARE i.e., CANADA RARE and Delta Electronics go up and down completely randomly.

Pair Corralation between CANADA RARE and Delta Electronics

Assuming the 90 days trading horizon CANADA RARE EARTH is expected to under-perform the Delta Electronics. In addition to that, CANADA RARE is 4.55 times more volatile than Delta Electronics Public. It trades about -0.35 of its total potential returns per unit of risk. Delta Electronics Public is currently generating about -0.09 per unit of volatility. If you would invest  420.00  in Delta Electronics Public on October 25, 2024 and sell it today you would lose (26.00) from holding Delta Electronics Public or give up 6.19% of portfolio value over 90 days.

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

CANADA RARE EARTH  vs.  Delta Electronics Public

CANADA RARE EARTH

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CANADA RARE EARTH are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CANADA RARE reported solid returns over the last few months and may actually be approaching a breakup point.

Delta Electronics Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delta Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CANADA RARE and Delta Electronics

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

The idea behind CANADA RARE EARTH and Delta Electronics Public 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.