Correlation Between Delfi and Mondelez International

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

By analyzing existing cross correlation between Delfi Limited and Mondelez International, you can compare the effects of market volatilities on Delfi and Mondelez International 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 Delfi with a short position of Mondelez International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delfi and Mondelez International.

Diversification Opportunities for Delfi and Mondelez International

0.08

Correlation Coefficient

Delfi  Mondelez International

Significant diversification

The 3 months correlation between Delfi and Mondelez is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Delfi Limited and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International and Delfi 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 Delfi Limited are associated (or correlated) with Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Delfi i.e., Delfi and Mondelez International go up and down completely randomly.

Pair Corralation between Delfi and Mondelez International

Assuming the 90 days horizon Delfi Limited is expected to under-perform the Mondelez International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Delfi Limited is 2.05 times less risky than Mondelez International. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Mondelez International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,909  in Mondelez International on December 29, 2024 and sell it today you would earn a total of  863.00  from holding Mondelez International or generate 14.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Delfi Limited  vs.  Mondelez International

Delfi Limited

Risk-Adjusted Performance

Very Weak

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

Mondelez International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mondelez International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Mondelez International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delfi and Mondelez International

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

The idea behind Delfi Limited and Mondelez International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.