Correlation Between VNET Group and International Business

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Can any of the company-specific risk be diversified away by investing in both VNET Group and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on VNET Group and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of VNET Group and International Business.

Diversification Opportunities for VNET Group and International Business

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between VNET and International is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VNET Group DRC and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of VNET Group i.e., VNET Group and International Business go up and down completely randomly.

Pair Corralation between VNET Group and International Business

Given the investment horizon of 90 days VNET Group DRC is expected to under-perform the International Business. In addition to that, VNET Group is 3.89 times more volatile than International Business Machines. It trades about -0.03 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.07 per unit of volatility. If you would invest  12,111  in International Business Machines on January 22, 2024 and sell it today you would earn a total of  6,047  from holding International Business Machines or generate 49.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

VNET Group DRC  vs.  International Business Machine

 Performance 
       Timeline  
VNET Group DRC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
International Business 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in May 2024.

VNET Group and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VNET Group and International Business

The main advantage of trading using opposite VNET Group and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VNET Group position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
The idea behind VNET Group DRC and International Business Machines 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.
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 Stocks Directory module to find actively traded stocks across global markets.

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