Correlation Between DXC Technology and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both DXC Technology and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on DXC Technology and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and China BlueChemical.
Diversification Opportunities for DXC Technology and China BlueChemical
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DXC and China is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of DXC Technology i.e., DXC Technology and China BlueChemical go up and down completely randomly.
Pair Corralation between DXC Technology and China BlueChemical
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the China BlueChemical. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 1.04 times less risky than China BlueChemical. The stock trades about -0.28 of its potential returns per unit of risk. The China BlueChemical is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 27.00 in China BlueChemical on November 29, 2024 and sell it today you would lose (1.00) from holding China BlueChemical or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. China BlueChemical
Performance |
| Timeline |
| DXC Technology |
| China BlueChemical |
DXC Technology and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and China BlueChemical
The main advantage of trading using opposite DXC Technology and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| DXC Technology vs. Silicon Motion Technology | DXC Technology vs. CHAMPION IRON | DXC Technology vs. Sekisui Chemical Co | DXC Technology vs. Soken Chemical Engineering |
| China BlueChemical vs. NEWELL RUBBERMAID | China BlueChemical vs. AIR PRODCHEMICALS | China BlueChemical vs. GOODYEAR T RUBBER | China BlueChemical vs. Tencent Music Entertainment |
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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