Correlation Between Patria Investments and Dell Technologies

Can any of the company-specific risk be diversified away by investing in both Patria Investments and Dell Technologies 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 Patria Investments and Dell Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Patria Investments Limited and Dell Technologies, you can compare the effects of market volatilities on Patria Investments and Dell Technologies 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 Patria Investments with a short position of Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Investments and Dell Technologies.

Diversification Opportunities for Patria Investments and Dell Technologies

0.72

Correlation Coefficient

Patria Investments  Dell Technologies

Poor diversification

The 3 months correlation between Patria and Dell is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies and Patria Investments 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 Patria Investments Limited are associated (or correlated) with Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Patria Investments i.e., Patria Investments and Dell Technologies go up and down completely randomly.

Pair Corralation between Patria Investments and Dell Technologies

Assuming the 90 days trading horizon Patria Investments Limited is expected to generate 0.5 times more return on investment than Dell Technologies. However, Patria Investments Limited is 2.01 times less risky than Dell Technologies. It trades about -0.05 of its potential returns per unit of risk. Dell Technologies is currently generating about -0.12 per unit of risk. If you would invest  3,544  in Patria Investments Limited on December 24, 2024 and sell it today you would lose (202.00) from holding Patria Investments Limited or give up 5.7% of portfolio value over 90 days.

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

Patria Investments Limited  vs.  Dell Technologies

Patria Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patria Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Patria Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Patria Investments and Dell Technologies

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

The idea behind Patria Investments Limited and Dell Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.