Correlation Between Sino Land and Delta Electronics

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

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

Diversification Opportunities for Sino Land and Delta Electronics

0.67

Correlation Coefficient

Sino Land  Delta Electronics

Poor diversification

The 3 months correlation between Sino and Delta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sino Land 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 Sino Land 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 Sino Land 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 Sino Land i.e., Sino Land and Delta Electronics go up and down completely randomly.

Pair Corralation between Sino Land and Delta Electronics

Assuming the 90 days horizon Sino Land is expected to generate 2.1 times more return on investment than Delta Electronics. However, Sino Land is 2.1 times more volatile than Delta Electronics Public. It trades about 0.13 of its potential returns per unit of risk. Delta Electronics Public is currently generating about 0.06 per unit of risk. If you would invest  59.00  in Sino Land on October 24, 2024 and sell it today you would earn a total of  34.00  from holding Sino Land or generate 57.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Sino Land  vs.  Delta Electronics Public

Sino Land

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Land are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sino Land reported solid returns over the last few months and may actually be approaching a breakup point.

Delta Electronics Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino Land and Delta Electronics

The main advantage of trading using opposite Sino Land and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino Land 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 Sino Land 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.