Correlation Between CDW Corp and GDS Holdings
Can any of the company-specific risk be diversified away by investing in both CDW Corp and GDS Holdings 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 CDW Corp and GDS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and GDS Holdings, you can compare the effects of market volatilities on CDW Corp and GDS Holdings 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 CDW Corp with a short position of GDS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and GDS Holdings.
Diversification Opportunities for CDW Corp and GDS Holdings
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CDW and GDS is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and GDS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDS Holdings and CDW Corp 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 CDW Corp are associated (or correlated) with GDS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDS Holdings has no effect on the direction of CDW Corp i.e., CDW Corp and GDS Holdings go up and down completely randomly.
Pair Corralation between CDW Corp and GDS Holdings
Considering the 90-day investment horizon CDW Corp is expected to under-perform the GDS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.84 times less risky than GDS Holdings. The stock trades about -0.26 of its potential returns per unit of risk. The GDS Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,185 in GDS Holdings on August 27, 2024 and sell it today you would lose (314.00) from holding GDS Holdings or give up 14.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. GDS Holdings
Performance |
| Timeline |
| CDW Corp |
| GDS Holdings |
CDW Corp and GDS Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and GDS Holdings
The main advantage of trading using opposite CDW Corp and GDS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, GDS Holdings 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 GDS Holdings will offset losses from the drop in GDS Holdings' long position.| CDW Corp vs. Plexus Corp | CDW Corp vs. Jabil Circuit | CDW Corp vs. Sanmina | CDW Corp vs. Methode Electronics |
| GDS Holdings vs. Oneconnect Financial Technology | GDS Holdings vs. Global Business Travel | GDS Holdings vs. Alight Inc | GDS Holdings vs. CS Disco LLC |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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