Correlation Between VNET Group and ProtoSource
Can any of the company-specific risk be diversified away by investing in both VNET Group and ProtoSource 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 VNET Group and ProtoSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VNET Group DRC and ProtoSource, you can compare the effects of market volatilities on VNET Group and ProtoSource 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 VNET Group with a short position of ProtoSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of VNET Group and ProtoSource.
Diversification Opportunities for VNET Group and ProtoSource
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VNET and ProtoSource is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding VNET Group DRC and ProtoSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProtoSource and VNET Group 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 VNET Group DRC are associated (or correlated) with ProtoSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProtoSource has no effect on the direction of VNET Group i.e., VNET Group and ProtoSource go up and down completely randomly.
Pair Corralation between VNET Group and ProtoSource
Given the investment horizon of 90 days VNET Group is expected to generate 1.62 times less return on investment than ProtoSource. But when comparing it to its historical volatility, VNET Group DRC is 2.04 times less risky than ProtoSource. It trades about 0.01 of its potential returns per unit of risk. ProtoSource is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1.61 in ProtoSource on August 30, 2024 and sell it today you would lose (0.69) from holding ProtoSource or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.11% |
| Values | Daily Returns |
VNET Group DRC vs. ProtoSource
Performance |
| Timeline |
| VNET Group DRC |
| ProtoSource |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
VNET Group and ProtoSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VNET Group and ProtoSource
The main advantage of trading using opposite VNET Group and ProtoSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VNET Group position performs unexpectedly, ProtoSource 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 ProtoSource will offset losses from the drop in ProtoSource's long position.| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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