Correlation Between DXC Technology and BII Railway

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

Diversification Opportunities for DXC Technology and BII Railway

-0.58

Correlation Coefficient

DXC Technology  BII Railway

Excellent diversification

The 3 months correlation between DXC and BII is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of DXC Technology i.e., DXC Technology and BII Railway go up and down completely randomly.

Pair Corralation between DXC Technology and BII Railway

Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the BII Railway. In addition to that, DXC Technology is 1.22 times more volatile than BII Railway Transportation. It trades about -0.15 of its total potential returns per unit of risk. BII Railway Transportation is currently generating about 0.06 per unit of volatility. If you would invest  2.80  in BII Railway Transportation on December 28, 2024 and sell it today you would earn a total of  0.15  from holding BII Railway Transportation or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DXC Technology Co  vs.  BII Railway Transportation

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BII Railway Transpor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BII Railway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DXC Technology and BII Railway

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

The idea behind DXC Technology Co and BII Railway Transportation 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 Stocks Directory module to find actively traded stocks across global markets.