Correlation Between 3D Systems and DPCM Capital

Can any of the company-specific risk be diversified away by investing in both 3D Systems and DPCM Capital 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 3D Systems and DPCM Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3D Systems and DPCM Capital, you can compare the effects of market volatilities on 3D Systems and DPCM Capital 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 3D Systems with a short position of DPCM Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3D Systems and DPCM Capital.

Diversification Opportunities for 3D Systems and DPCM Capital

-0.06

Correlation Coefficient

3D Systems  DPCM Capital

Good diversification

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

Pair Corralation between 3D Systems and DPCM Capital

Considering the 90-day investment horizon 3D Systems is expected to generate 0.66 times more return on investment than DPCM Capital. However, 3D Systems is 1.52 times less risky than DPCM Capital. It trades about -0.21 of its potential returns per unit of risk. DPCM Capital is currently generating about -0.42 per unit of risk. If you would invest  407.00  in 3D Systems on February 4, 2024 and sell it today you would lose (45.00) from holding 3D Systems or give up 11.06% of portfolio value over 90 days.

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

3D Systems  vs.  DPCM Capital

3D Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3D Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DPCM Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DPCM Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, DPCM Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 3D Systems and DPCM Capital

The main advantage of trading using opposite 3D Systems and DPCM Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3D Systems position performs unexpectedly, DPCM Capital 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 DPCM Capital will offset losses from the drop in DPCM Capital's long position.

The idea behind 3D Systems and DPCM 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.