Correlation Between Dell Technologies and Eurotech SpA

Can any of the company-specific risk be diversified away by investing in both Dell Technologies and Eurotech SpA 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 Dell Technologies and Eurotech SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dell Technologies and Eurotech SpA, you can compare the effects of market volatilities on Dell Technologies and Eurotech SpA 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 Dell Technologies with a short position of Eurotech SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dell Technologies and Eurotech SpA.

Diversification Opportunities for Dell Technologies and Eurotech SpA

0.51

Correlation Coefficient

Dell Technologies  Eurotech SpA

Very weak diversification

The 3 months correlation between Dell and Eurotech is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Eurotech SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurotech SpA and Dell Technologies 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 Dell Technologies are associated (or correlated) with Eurotech SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurotech SpA has no effect on the direction of Dell Technologies i.e., Dell Technologies and Eurotech SpA go up and down completely randomly.

Pair Corralation between Dell Technologies and Eurotech SpA

Assuming the 90 days trading horizon Dell Technologies is expected to under-perform the Eurotech SpA. But the stock apears to be less risky and, when comparing its historical volatility, Dell Technologies is 1.69 times less risky than Eurotech SpA. The stock trades about -0.09 of its potential returns per unit of risk. The Eurotech SpA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Eurotech SpA on December 29, 2024 and sell it today you would lose (1.00) from holding Eurotech SpA or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dell Technologies  vs.  Eurotech SpA

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eurotech SpA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eurotech SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eurotech SpA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dell Technologies and Eurotech SpA

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

The idea behind Dell Technologies and Eurotech SpA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.