Correlation Between Dell Technologies and Patria Investments

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

By analyzing existing cross correlation between Dell Technologies and Patria Investments Limited, you can compare the effects of market volatilities on Dell Technologies and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dell Technologies and Patria Investments.

Diversification Opportunities for Dell Technologies and Patria Investments

0.72

Correlation Coefficient

Dell Technologies  Patria Investments

Poor diversification

The 3 months correlation between Dell and Patria is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Dell Technologies i.e., Dell Technologies and Patria Investments go up and down completely randomly.

Pair Corralation between Dell Technologies and Patria Investments

Assuming the 90 days trading horizon Dell Technologies is expected to under-perform the Patria Investments. In addition to that, Dell Technologies is 2.01 times more volatile than Patria Investments Limited. It trades about -0.12 of its total potential returns per unit of risk. Patria Investments Limited is currently generating about -0.05 per unit of volatility. If you would invest  3,544  in Patria Investments Limited on December 24, 2024 and sell it today you would lose (202.00) from holding Patria Investments Limited or give up 5.7% of portfolio value over 90 days.

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

Dell Technologies  vs.  Patria Investments Limited

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Patria Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patria Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Patria Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dell Technologies and Patria Investments

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

The idea behind Dell Technologies and Patria Investments Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..