Correlation Between Leju Holdings and Delek Automotive

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Can any of the company-specific risk be diversified away by investing in both Leju Holdings and Delek Automotive 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 Leju Holdings and Delek Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leju Holdings Limited and Delek Automotive Systems, you can compare the effects of market volatilities on Leju Holdings and Delek Automotive 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 Leju Holdings with a short position of Delek Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leju Holdings and Delek Automotive.

Diversification Opportunities for Leju Holdings and Delek Automotive

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Leju and Delek is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Leju Holdings Limited and Delek Automotive Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Automotive Systems and Leju Holdings 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 Leju Holdings Limited are associated (or correlated) with Delek Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Automotive Systems has no effect on the direction of Leju Holdings i.e., Leju Holdings and Delek Automotive go up and down completely randomly.

Pair Corralation between Leju Holdings and Delek Automotive

Given the investment horizon of 90 days Leju Holdings Limited is expected to under-perform the Delek Automotive. In addition to that, Leju Holdings is 2.1 times more volatile than Delek Automotive Systems. It trades about -0.11 of its total potential returns per unit of risk. Delek Automotive Systems is currently generating about 0.12 per unit of volatility. If you would invest  217,900  in Delek Automotive Systems on December 29, 2023 and sell it today you would earn a total of  9,700  from holding Delek Automotive Systems or generate 4.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy81.82%
ValuesDaily Returns

Leju Holdings Limited  vs.  Delek Automotive Systems

 Performance 
       Timeline  
Leju Holdings Limited 

Risk-Adjusted Performance

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Over the last 90 days Leju Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking indicators remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Delek Automotive Systems 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Delek Automotive Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Delek Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leju Holdings and Delek Automotive Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Leju Holdings and Delek Automotive

The main advantage of trading using opposite Leju Holdings and Delek Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leju Holdings position performs unexpectedly, Delek Automotive 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 Delek Automotive will offset losses from the drop in Delek Automotive's long position.
The idea behind Leju Holdings Limited and Delek Automotive Systems 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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