Correlation Between DXC Technology and New Oriental
Can any of the company-specific risk be diversified away by investing in both DXC Technology and New Oriental 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 New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology and New Oriental Education, you can compare the effects of market volatilities on DXC Technology and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and New Oriental.
Diversification Opportunities for DXC Technology and New Oriental
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DXC and New is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of DXC Technology i.e., DXC Technology and New Oriental go up and down completely randomly.
Pair Corralation between DXC Technology and New Oriental
Assuming the 90 days trading horizon DXC Technology is expected to generate 0.26 times more return on investment than New Oriental. However, DXC Technology is 3.84 times less risky than New Oriental. It trades about -0.15 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.09 per unit of risk. If you would invest 13,416 in DXC Technology on October 28, 2024 and sell it today you would lose (1,104) from holding DXC Technology or give up 8.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology vs. New Oriental Education
Performance |
| Timeline |
| DXC Technology |
| New Oriental Education |
DXC Technology and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and New Oriental
The main advantage of trading using opposite DXC Technology and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| DXC Technology vs. Sumitomo Mitsui Financial | DXC Technology vs. Martin Marietta Materials, | DXC Technology vs. Applied Materials, | DXC Technology vs. Check Point Software |
| New Oriental vs. Academy Sports and | New Oriental vs. Waste Management | New Oriental vs. PENN Entertainment, | New Oriental vs. Live Nation 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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