Correlation Between DXC Technology and FS KKR

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

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

Diversification Opportunities for DXC Technology and FS KKR

0.43

Correlation Coefficient

DXC Technology  FS KKR

Very weak diversification

The 3 months correlation between DXC and FSK is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital 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 Co are associated (or correlated) with FS KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of DXC Technology i.e., DXC Technology and FS KKR go up and down completely randomly.

Pair Corralation between DXC Technology and FS KKR

Considering the 90-day investment horizon DXC Technology Co is expected to generate 3.13 times more return on investment than FS KKR. However, DXC Technology is 3.13 times more volatile than FS KKR Capital. It trades about 0.07 of its potential returns per unit of risk. FS KKR Capital is currently generating about 0.14 per unit of risk. If you would invest  1,560  in DXC Technology Co on April 10, 2025 and sell it today you would earn a total of  44.00  from holding DXC Technology Co or generate 2.82% return on investment over 90 days.

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

DXC Technology Co  vs.  FS KKR Capital

DXC Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, DXC Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

FS KKR Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, FS KKR disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DXC Technology and FS KKR

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

The idea behind DXC Technology Co and FS KKR Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.