Correlation Between Dhc Software and XJ Electric

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

Diversification Opportunities for Dhc Software and XJ Electric

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Dhc and 000400 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dhc Software Co and XJ Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XJ Electric and Dhc Software 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 Dhc Software Co are associated (or correlated) with XJ Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XJ Electric has no effect on the direction of Dhc Software i.e., Dhc Software and XJ Electric go up and down completely randomly.

Pair Corralation between Dhc Software and XJ Electric

Assuming the 90 days trading horizon Dhc Software Co is expected to generate 1.45 times more return on investment than XJ Electric. However, Dhc Software is 1.45 times more volatile than XJ Electric Co. It trades about -0.16 of its potential returns per unit of risk. XJ Electric Co is currently generating about -0.23 per unit of risk. If you would invest  915.00  in Dhc Software Co on September 14, 2024 and sell it today you would lose (101.00) from holding Dhc Software Co or give up 11.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Dhc Software Co  vs.  XJ Electric Co

 Performance 
       Timeline  
Dhc Software 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dhc Software Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dhc Software sustained solid returns over the last few months and may actually be approaching a breakup point.
XJ Electric 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days XJ Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dhc Software and XJ Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dhc Software and XJ Electric

The main advantage of trading using opposite Dhc Software and XJ Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dhc Software position performs unexpectedly, XJ Electric 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 XJ Electric will offset losses from the drop in XJ Electric's long position.
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The idea behind Dhc Software Co and XJ Electric Co 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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Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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