Correlation Between Digimarc and VNET Group
Can any of the company-specific risk be diversified away by investing in both Digimarc and VNET Group 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 Digimarc and VNET Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and VNET Group DRC, you can compare the effects of market volatilities on Digimarc and VNET Group 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 Digimarc with a short position of VNET Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and VNET Group.
Diversification Opportunities for Digimarc and VNET Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Digimarc and VNET is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and VNET Group DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNET Group DRC and Digimarc 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 Digimarc are associated (or correlated) with VNET Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNET Group DRC has no effect on the direction of Digimarc i.e., Digimarc and VNET Group go up and down completely randomly.
Pair Corralation between Digimarc and VNET Group
Given the investment horizon of 90 days Digimarc is expected to generate 2.5 times less return on investment than VNET Group. But when comparing it to its historical volatility, Digimarc is 1.81 times less risky than VNET Group. It trades about 0.09 of its potential returns per unit of risk. VNET Group DRC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 248.00 in VNET Group DRC on August 29, 2024 and sell it today you would earn a total of 111.00 from holding VNET Group DRC or generate 44.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digimarc vs. VNET Group DRC
Performance |
| Timeline |
| Digimarc |
| VNET Group DRC |
Digimarc and VNET Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and VNET Group
The main advantage of trading using opposite Digimarc and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, VNET Group 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 VNET Group will offset losses from the drop in VNET Group's long position.The idea behind Digimarc and VNET Group DRC 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.| VNET Group vs. CLARIVATE PLC | VNET Group vs. WNS Holdings | VNET Group vs. GDS Holdings | VNET Group vs. CACI International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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