Correlation Between DSV Panalpina and GXO Logistics

Can any of the company-specific risk be diversified away by investing in both DSV Panalpina and GXO Logistics 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 DSV Panalpina and GXO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DSV Panalpina AS and GXO Logistics, you can compare the effects of market volatilities on DSV Panalpina and GXO Logistics 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 DSV Panalpina with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSV Panalpina and GXO Logistics.

Diversification Opportunities for DSV Panalpina and GXO Logistics

-0.04

Correlation Coefficient

DSV Panalpina  GXO Logistics

Good diversification

The 3 months correlation between DSV and GXO is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and DSV Panalpina 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 DSV Panalpina AS are associated (or correlated) with GXO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GXO Logistics has no effect on the direction of DSV Panalpina i.e., DSV Panalpina and GXO Logistics go up and down completely randomly.

Pair Corralation between DSV Panalpina and GXO Logistics

Assuming the 90 days horizon DSV Panalpina AS is expected to generate 0.88 times more return on investment than GXO Logistics. However, DSV Panalpina AS is 1.14 times less risky than GXO Logistics. It trades about -0.02 of its potential returns per unit of risk. GXO Logistics is currently generating about -0.03 per unit of risk. If you would invest  21,102  in DSV Panalpina AS on December 26, 2024 and sell it today you would lose (1,142) from holding DSV Panalpina AS or give up 5.41% of portfolio value over 90 days.

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

DSV Panalpina AS  vs.  GXO Logistics

DSV Panalpina AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DSV Panalpina AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DSV Panalpina is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GXO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GXO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GXO Logistics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DSV Panalpina and GXO Logistics

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

The idea behind DSV Panalpina AS and GXO Logistics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.