Correlation Between DXC Technology and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both DXC Technology and LPKF Laser 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 DXC Technology and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and LPKF Laser Electronics, you can compare the effects of market volatilities on DXC Technology and LPKF Laser 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 DXC Technology with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and LPKF Laser.
Diversification Opportunities for DXC Technology and LPKF Laser
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXC and LPKF is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and DXC Technology 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 DXC Technology Co are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of DXC Technology i.e., DXC Technology and LPKF Laser go up and down completely randomly.
Pair Corralation between DXC Technology and LPKF Laser
Assuming the 90 days trading horizon DXC Technology Co is expected to generate 1.39 times more return on investment than LPKF Laser. However, DXC Technology is 1.39 times more volatile than LPKF Laser Electronics. It trades about 0.13 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.03 per unit of risk. If you would invest 1,563 in DXC Technology Co on August 31, 2024 and sell it today you would earn a total of 678.00 from holding DXC Technology Co or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
DXC Technology Co vs. LPKF Laser Electronics
Performance |
| Timeline |
| DXC Technology |
| LPKF Laser Electronics |
DXC Technology and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and LPKF Laser
The main advantage of trading using opposite DXC Technology and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| DXC Technology vs. Gamma Communications PLC | DXC Technology vs. Charter Communications Cl | DXC Technology vs. HCA Healthcare | DXC Technology vs. Global Net Lease |
| LPKF Laser vs. Neometals | LPKF Laser vs. Coor Service Management | LPKF Laser vs. Aeorema Communications Plc | LPKF Laser vs. JLEN Environmental Assets |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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