Correlation Between Xerox Corp and Digital China
Can any of the company-specific risk be diversified away by investing in both Xerox Corp and Digital China 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 Xerox Corp and Digital China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xerox Corp and Digital China Holdings, you can compare the effects of market volatilities on Xerox Corp and Digital China 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 Xerox Corp with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xerox Corp and Digital China.
Diversification Opportunities for Xerox Corp and Digital China
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xerox and Digital is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xerox Corp and Digital China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Holdings and Xerox Corp 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 Xerox Corp are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Holdings has no effect on the direction of Xerox Corp i.e., Xerox Corp and Digital China go up and down completely randomly.
Pair Corralation between Xerox Corp and Digital China
Considering the 90-day investment horizon Xerox Corp is expected to generate 0.98 times more return on investment than Digital China. However, Xerox Corp is 1.02 times less risky than Digital China. It trades about -0.06 of its potential returns per unit of risk. Digital China Holdings is currently generating about -0.07 per unit of risk. If you would invest 1,069 in Xerox Corp on August 31, 2024 and sell it today you would lose (163.00) from holding Xerox Corp or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xerox Corp vs. Digital China Holdings
Performance |
| Timeline |
| Xerox Corp |
| Digital China Holdings |
Xerox Corp and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xerox Corp and Digital China
The main advantage of trading using opposite Xerox Corp and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xerox Corp position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.| Xerox Corp vs. ExlService Holdings | Xerox Corp vs. CSP Inc | Xerox Corp vs. ASGN Inc | Xerox Corp vs. Jack Henry Associates |
| Digital China vs. Kyndryl Holdings | Digital China vs. Accenture plc | Digital China vs. BigBearai Holdings | Digital China vs. Xerox 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 Stocks Directory module to find actively traded stocks across global markets.
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