Correlation Between Gildan Activewear and VNET Group

Can any of the company-specific risk be diversified away by investing in both Gildan Activewear 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 Gildan Activewear and VNET Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gildan Activewear and VNET Group DRC, you can compare the effects of market volatilities on Gildan Activewear 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 Gildan Activewear with a short position of VNET Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gildan Activewear and VNET Group.

Diversification Opportunities for Gildan Activewear and VNET Group

0.63

Correlation Coefficient

Gildan Activewear  VNET Group

Poor diversification

The 3 months correlation between Gildan and VNET is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gildan Activewear 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 Gildan Activewear 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 Gildan Activewear 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 Gildan Activewear i.e., Gildan Activewear and VNET Group go up and down completely randomly.

Pair Corralation between Gildan Activewear and VNET Group

Considering the 90-day investment horizon Gildan Activewear is expected to generate 5.44 times less return on investment than VNET Group. But when comparing it to its historical volatility, Gildan Activewear is 5.18 times less risky than VNET Group. It trades about 0.29 of its potential returns per unit of risk. VNET Group DRC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  568.00  in VNET Group DRC on April 15, 2025 and sell it today you would earn a total of  227.00  from holding VNET Group DRC or generate 39.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Gildan Activewear  vs.  VNET Group DRC

Gildan Activewear

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gildan Activewear are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Gildan Activewear disclosed solid returns over the last few months and may actually be approaching a breakup point.

VNET Group DRC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, VNET Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gildan Activewear and VNET Group

The main advantage of trading using opposite Gildan Activewear and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gildan Activewear 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 Gildan Activewear 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.