Correlation Between DXC Technology and Hoteles City

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

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

Diversification Opportunities for DXC Technology and Hoteles City

0.0

Correlation Coefficient

DXC Technology  Hoteles City

Pay attention - limited upside

The 3 months correlation between DXC and Hoteles is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express 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 Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of DXC Technology i.e., DXC Technology and Hoteles City go up and down completely randomly.

Pair Corralation between DXC Technology and Hoteles City

Assuming the 90 days trading horizon DXC Technology is expected to generate 0.54 times more return on investment than Hoteles City. However, DXC Technology is 1.84 times less risky than Hoteles City. It trades about -0.07 of its potential returns per unit of risk. Hoteles City Express is currently generating about -0.04 per unit of risk. If you would invest  57,066  in DXC Technology on October 13, 2024 and sell it today you would lose (21,066) from holding DXC Technology or give up 36.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

DXC Technology  vs.  Hoteles City Express

DXC Technology

Risk-Adjusted Performance

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Very Weak

Over the last 90 days DXC Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, DXC Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hoteles City Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles City Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with DXC Technology and Hoteles City

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

The idea behind DXC Technology and Hoteles City Express 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.