Correlation Between Geo and VNET Group
Can any of the company-specific risk be diversified away by investing in both Geo 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 Geo and VNET Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geo Group and VNET Group DRC, you can compare the effects of market volatilities on Geo 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 Geo with a short position of VNET Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo and VNET Group.
Diversification Opportunities for Geo and VNET Group
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Geo and VNET is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Geo Group 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 Geo 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 Geo Group 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 Geo i.e., Geo and VNET Group go up and down completely randomly.
Pair Corralation between Geo and VNET Group
Considering the 90-day investment horizon Geo Group is expected to generate 0.5 times more return on investment than VNET Group. However, Geo Group is 1.99 times less risky than VNET Group. It trades about 0.08 of its potential returns per unit of risk. VNET Group DRC is currently generating about -0.01 per unit of risk. If you would invest 1,452 in Geo Group on January 26, 2024 and sell it today you would earn a total of 55.00 from holding Geo Group or generate 3.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Geo Group vs. VNET Group DRC
Performance |
Timeline |
Geo Group |
VNET Group DRC |
Geo and VNET Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Geo and VNET Group
The main advantage of trading using opposite Geo and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo 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 Geo Group 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. CACI International | VNET Group vs. CDW Corp | VNET Group vs. Jack Henry Associates | VNET Group vs. Broadridge Financial Solutions |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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