Correlation Between DXC Technology and LBG Media

Can any of the company-specific risk be diversified away by investing in both DXC Technology and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on DXC Technology and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and LBG Media.

Diversification Opportunities for DXC Technology and LBG Media

0.23

Correlation Coefficient

DXC Technology  LBG Media

Modest diversification

The 3 months correlation between DXC and LBG is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of DXC Technology i.e., DXC Technology and LBG Media go up and down completely randomly.

Pair Corralation between DXC Technology and LBG Media

Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 1.32 times less risky than LBG Media. The stock trades about -0.15 of its potential returns per unit of risk. The LBG Media PLC is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  12,700  in LBG Media PLC on November 29, 2024 and sell it today you would lose (2,100) from holding LBG Media PLC or give up 16.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

DXC Technology Co  vs.  LBG Media PLC

DXC Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days DXC Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LBG Media PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LBG Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with DXC Technology and LBG Media

The main advantage of trading using opposite DXC Technology and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.

The idea behind DXC Technology Co and LBG Media PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.