Correlation Between Dell Technologies and Perimeter Solutions

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

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

Diversification Opportunities for Dell Technologies and Perimeter Solutions

0.74

Correlation Coefficient

Dell Technologies  Perimeter Solutions

Poor diversification

The 3 months correlation between Dell and Perimeter is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions and Dell Technologies 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 Dell Technologies are associated (or correlated) with Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Dell Technologies i.e., Dell Technologies and Perimeter Solutions go up and down completely randomly.

Pair Corralation between Dell Technologies and Perimeter Solutions

Given the investment horizon of 90 days Dell Technologies is expected to generate 0.89 times more return on investment than Perimeter Solutions. However, Dell Technologies is 1.13 times less risky than Perimeter Solutions. It trades about 0.1 of its potential returns per unit of risk. Perimeter Solutions SA is currently generating about -0.1 per unit of risk. If you would invest  12,522  in Dell Technologies on August 20, 2024 and sell it today you would earn a total of  642.00  from holding Dell Technologies or generate 5.13% return on investment over 90 days.

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

Dell Technologies  vs.  Perimeter Solutions SA

Dell Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Dell Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Perimeter Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dell Technologies and Perimeter Solutions

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

The idea behind Dell Technologies and Perimeter Solutions SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.