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

0.95

Correlation Coefficient

GDS Holdings  VNET Group

Almost no diversification

The 3 months correlation between GDS and VNET is 0.95. 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 generate 0.97 times more return on investment than VNET Group. However, GDS Holdings is 1.03 times less risky than VNET Group. It trades about 0.0 of its potential returns per unit of risk. VNET Group DRC is currently generating about -0.09 per unit of risk. If you would invest  2,925  in GDS Holdings on February 8, 2025 and sell it today you would lose (380.00) from holding GDS Holdings or give up 12.99% 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

GDS Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GDS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, GDS Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

VNET Group DRC

Risk-Adjusted Performance

Very Weak

Over the last 90 days VNET Group DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

The idea behind GDS Holdings 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.

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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 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.