Correlation Between Delta Electronics and Firetrade Engineering

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

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

Diversification Opportunities for Delta Electronics and Firetrade Engineering

-0.82

Correlation Coefficient

Delta Electronics  Firetrade Engineering

Pay attention - limited upside

The 3 months correlation between Delta and Firetrade is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Firetrade Engineering PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetrade Engineering PCL and Delta Electronics 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 Delta Electronics Public are associated (or correlated) with Firetrade Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetrade Engineering PCL has no effect on the direction of Delta Electronics i.e., Delta Electronics and Firetrade Engineering go up and down completely randomly.

Pair Corralation between Delta Electronics and Firetrade Engineering

Assuming the 90 days trading horizon Delta Electronics is expected to generate 139.49 times less return on investment than Firetrade Engineering. But when comparing it to its historical volatility, Delta Electronics Public is 12.87 times less risky than Firetrade Engineering. It trades about 0.0 of its potential returns per unit of risk. Firetrade Engineering PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Firetrade Engineering PCL on January 15, 2025 and sell it today you would earn a total of  14.00  from holding Firetrade Engineering PCL or generate 9.59% return on investment over 90 days.

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

Delta Electronics Public  vs.  Firetrade Engineering PCL

Delta Electronics Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Firetrade Engineering PCL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firetrade Engineering PCL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Firetrade Engineering may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Delta Electronics and Firetrade Engineering

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

The idea behind Delta Electronics Public and Firetrade Engineering PCL 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.