Correlation Between DXC Technology and CM Hospitalar

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

By analyzing existing cross correlation between DXC Technology and CM Hospitalar SA, you can compare the effects of market volatilities on DXC Technology and CM Hospitalar 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 CM Hospitalar. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and CM Hospitalar.

Diversification Opportunities for DXC Technology and CM Hospitalar

-0.35

Correlation Coefficient

DXC Technology  CM Hospitalar

Very good diversification

The 3 months correlation between DXC and VVEO3 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA 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 are associated (or correlated) with CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of DXC Technology i.e., DXC Technology and CM Hospitalar go up and down completely randomly.

Pair Corralation between DXC Technology and CM Hospitalar

Assuming the 90 days trading horizon DXC Technology is expected to under-perform the CM Hospitalar. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology is 1.95 times less risky than CM Hospitalar. The stock trades about -0.24 of its potential returns per unit of risk. The CM Hospitalar SA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  198.00  in CM Hospitalar SA on October 23, 2024 and sell it today you would lose (11.00) from holding CM Hospitalar SA or give up 5.56% of portfolio value over 90 days.

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

DXC Technology  vs.  CM Hospitalar SA

DXC Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, DXC Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

CM Hospitalar SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CM Hospitalar SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CM Hospitalar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DXC Technology and CM Hospitalar

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

The idea behind DXC Technology and CM Hospitalar SA 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.