Correlation Between KINGBOARD CHEMICAL and DXC Technology

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

By analyzing existing cross correlation between KINGBOARD CHEMICAL and DXC Technology Co, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and DXC Technology 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 KINGBOARD CHEMICAL with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and DXC Technology.

Diversification Opportunities for KINGBOARD CHEMICAL and DXC Technology

0.06

Correlation Coefficient

KINGBOARD CHEMICAL  DXC Technology

Significant diversification

The 3 months correlation between KINGBOARD and DXC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and DXC Technology go up and down completely randomly.

Pair Corralation between KINGBOARD CHEMICAL and DXC Technology

Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.39 times more return on investment than DXC Technology. However, KINGBOARD CHEMICAL is 1.39 times more volatile than DXC Technology Co. It trades about 0.07 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.0 per unit of risk. If you would invest  146.00  in KINGBOARD CHEMICAL on October 7, 2024 and sell it today you would earn a total of  80.00  from holding KINGBOARD CHEMICAL or generate 54.79% return on investment over 90 days.

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

KINGBOARD CHEMICAL  vs.  DXC Technology Co

KINGBOARD CHEMICAL

Risk-Adjusted Performance

2 of 100

Weak

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

DXC Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DXC Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KINGBOARD CHEMICAL and DXC Technology

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

The idea behind KINGBOARD CHEMICAL and DXC Technology Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.