Correlation Between BII Railway and Delta Electronics

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

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

Diversification Opportunities for BII Railway and Delta Electronics

-0.56

Correlation Coefficient

BII Railway  Delta Electronics

Excellent diversification

The 3 months correlation between BII and Delta is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Delta Electronics go up and down completely randomly.

Pair Corralation between BII Railway and Delta Electronics

Assuming the 90 days horizon BII Railway is expected to generate 3.91 times less return on investment than Delta Electronics. In addition to that, BII Railway is 1.17 times more volatile than Delta Electronics Public. It trades about 0.04 of its total potential returns per unit of risk. Delta Electronics Public is currently generating about 0.19 per unit of volatility. If you would invest  294.00  in Delta Electronics Public on September 27, 2024 and sell it today you would earn a total of  122.00  from holding Delta Electronics Public or generate 41.5% return on investment over 90 days.

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

BII Railway Transportation  vs.  Delta Electronics Public

BII Railway Transpor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BII Railway may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Delta Electronics Public

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BII Railway and Delta Electronics

The main advantage of trading using opposite BII Railway and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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 BII Railway Transportation 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.