Correlation Between Hong Kong and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Hong Kong and DXC Technology 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 Hong Kong and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Land and DXC Technology Co, you can compare the effects of market volatilities on Hong Kong and DXC Technology 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 Hong Kong with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and DXC Technology.
Diversification Opportunities for Hong Kong and DXC Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hong and DXC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Hong Kong 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 Hong Kong Land are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Hong Kong i.e., Hong Kong and DXC Technology go up and down completely randomly.
Pair Corralation between Hong Kong and DXC Technology
Assuming the 90 days trading horizon Hong Kong is expected to generate 49.22 times less return on investment than DXC Technology. But when comparing it to its historical volatility, Hong Kong Land is 32.33 times less risky than DXC Technology. It trades about 0.09 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,546 in DXC Technology Co on September 3, 2024 and sell it today you would earn a total of 695.00 from holding DXC Technology Co or generate 44.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Hong Kong Land vs. DXC Technology Co
Performance |
| Timeline |
| Hong Kong Land |
| DXC Technology |
Hong Kong and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and DXC Technology
The main advantage of trading using opposite Hong Kong and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Hong Kong vs. Neometals | Hong Kong vs. McEwen Mining | Hong Kong vs. CompuGroup Medical AG | Hong Kong vs. Wheaton Precious Metals |
| DXC Technology vs. Home Depot | DXC Technology vs. Synthomer plc | DXC Technology vs. DFS Furniture PLC | DXC Technology vs. Westlake Chemical Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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