Correlation Between PT Ace and DXC Technology

Can any of the company-specific risk be diversified away by investing in both PT Ace 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 PT Ace and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Ace Hardware and DXC Technology Co, you can compare the effects of market volatilities on PT Ace 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 PT Ace with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Ace and DXC Technology.

Diversification Opportunities for PT Ace and DXC Technology

-0.77

Correlation Coefficient

PT Ace  DXC Technology

Pay attention - limited upside

The 3 months correlation between 4AH1 and DXC is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and PT Ace 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 PT Ace Hardware 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 PT Ace i.e., PT Ace and DXC Technology go up and down completely randomly.

Pair Corralation between PT Ace and DXC Technology

Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 1.99 times more return on investment than DXC Technology. However, PT Ace is 1.99 times more volatile than DXC Technology Co. It trades about 0.02 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.02 per unit of risk. If you would invest  4.40  in PT Ace Hardware on October 4, 2024 and sell it today you would lose (0.10) from holding PT Ace Hardware or give up 2.27% of portfolio value over 90 days.

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

PT Ace Hardware  vs.  DXC Technology Co

PT Ace Hardware

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Ace Hardware are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, PT Ace is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DXC Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DXC Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Ace and DXC Technology

The main advantage of trading using opposite PT Ace and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Ace 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.

The idea behind PT Ace Hardware and DXC Technology Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.