Correlation Between PB Fintech and Delta Manufacturing

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

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

Diversification Opportunities for PB Fintech and Delta Manufacturing

0.84

Correlation Coefficient

PB Fintech  Delta Manufacturing

Very poor diversification

The 3 months correlation between POLICYBZR and Delta is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PB Fintech Limited and Delta Manufacturing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Manufacturing and PB Fintech 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 PB Fintech Limited are associated (or correlated) with Delta Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Manufacturing has no effect on the direction of PB Fintech i.e., PB Fintech and Delta Manufacturing go up and down completely randomly.

Pair Corralation between PB Fintech and Delta Manufacturing

Assuming the 90 days trading horizon PB Fintech is expected to generate 27.17 times less return on investment than Delta Manufacturing. But when comparing it to its historical volatility, PB Fintech Limited is 1.32 times less risky than Delta Manufacturing. It trades about 0.0 of its potential returns per unit of risk. Delta Manufacturing Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,960  in Delta Manufacturing Limited on October 25, 2024 and sell it today you would earn a total of  1,215  from holding Delta Manufacturing Limited or generate 13.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

PB Fintech Limited  vs.  Delta Manufacturing Limited

PB Fintech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PB Fintech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, PB Fintech is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Delta Manufacturing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Manufacturing Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Delta Manufacturing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PB Fintech and Delta Manufacturing

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

The idea behind PB Fintech Limited and Delta Manufacturing Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.