Correlation Between GDS Holdings and VNET Group
Can any of the company-specific risk be diversified away by investing in both GDS Holdings 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 GDS Holdings and VNET Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GDS Holdings and VNET Group DRC, you can compare the effects of market volatilities on GDS Holdings 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 GDS Holdings with a short position of VNET Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDS Holdings and VNET Group.
Diversification Opportunities for GDS Holdings and VNET Group
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GDS and VNET is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding GDS Holdings 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 GDS Holdings 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 GDS Holdings 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 GDS Holdings i.e., GDS Holdings and VNET Group go up and down completely randomly.
Pair Corralation between GDS Holdings and VNET Group
Considering the 90-day investment horizon GDS Holdings is expected to under-perform the VNET Group. But the stock apears to be less risky and, when comparing its historical volatility, GDS Holdings is 1.15 times less risky than VNET Group. The stock trades about -0.15 of its potential returns per unit of risk. The VNET Group DRC is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 996.00 in VNET Group DRC on January 1, 2025 and sell it today you would lose (176.00) from holding VNET Group DRC or give up 17.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GDS Holdings vs. VNET Group DRC
Performance |
| Timeline |
| GDS Holdings |
| VNET Group DRC |
GDS Holdings and VNET Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GDS Holdings and VNET Group
The main advantage of trading using opposite GDS Holdings and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDS Holdings 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.| GDS Holdings vs. ExlService Holdings | ||
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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