Correlation Between THORNEY TECHS and DXC Technology

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

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

Diversification Opportunities for THORNEY TECHS and DXC Technology

-0.15

Correlation Coefficient

THORNEY TECHS  DXC Technology

Good diversification

The 3 months correlation between THORNEY and DXC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and THORNEY TECHS 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 THORNEY TECHS LTD 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 THORNEY TECHS i.e., THORNEY TECHS and DXC Technology go up and down completely randomly.

Pair Corralation between THORNEY TECHS and DXC Technology

Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 2.61 times more return on investment than DXC Technology. However, THORNEY TECHS is 2.61 times more volatile than DXC Technology Co. It trades about 0.01 of its potential returns per unit of risk. DXC Technology Co is currently generating about -0.22 per unit of risk. If you would invest  7.60  in THORNEY TECHS LTD on October 16, 2024 and sell it today you would lose (0.05) from holding THORNEY TECHS LTD or give up 0.66% of portfolio value over 90 days.

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

THORNEY TECHS LTD  vs.  DXC Technology Co

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

DXC Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DXC Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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 THORNEY TECHS and DXC Technology

The main advantage of trading using opposite THORNEY TECHS and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS 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 THORNEY TECHS LTD 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.