Correlation Between DTC Industries and XSpring Capital

Can any of the company-specific risk be diversified away by investing in both DTC Industries and XSpring Capital 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 DTC Industries and XSpring Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DTC Industries Public and XSpring Capital Public, you can compare the effects of market volatilities on DTC Industries and XSpring Capital 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 DTC Industries with a short position of XSpring Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTC Industries and XSpring Capital.

Diversification Opportunities for DTC Industries and XSpring Capital

0.31

Correlation Coefficient

DTC Industries  XSpring Capital

Weak diversification

The 3 months correlation between DTC and XSpring is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding DTC Industries Public and XSpring Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpring Capital Public and DTC Industries 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 DTC Industries Public are associated (or correlated) with XSpring Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpring Capital Public has no effect on the direction of DTC Industries i.e., DTC Industries and XSpring Capital go up and down completely randomly.

Pair Corralation between DTC Industries and XSpring Capital

Assuming the 90 days trading horizon DTC Industries Public is expected to generate 4.26 times more return on investment than XSpring Capital. However, DTC Industries is 4.26 times more volatile than XSpring Capital Public. It trades about 0.02 of its potential returns per unit of risk. XSpring Capital Public is currently generating about -0.08 per unit of risk. If you would invest  3,250  in DTC Industries Public on December 29, 2024 and sell it today you would lose (450.00) from holding DTC Industries Public or give up 13.85% of portfolio value over 90 days.

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

DTC Industries Public  vs.  XSpring Capital Public

DTC Industries Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DTC Industries Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, DTC Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

XSpring Capital Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days XSpring Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with DTC Industries and XSpring Capital

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

The idea behind DTC Industries Public and XSpring Capital Public 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.