Correlation Between GDS Holdings and Data Storage

Can any of the company-specific risk be diversified away by investing in both GDS Holdings and Data Storage 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 Data Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GDS Holdings and Data Storage, you can compare the effects of market volatilities on GDS Holdings and Data Storage 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 Data Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDS Holdings and Data Storage.

Diversification Opportunities for GDS Holdings and Data Storage

0.0

Correlation Coefficient

GDS Holdings  Data Storage

Pay attention - limited upside

The 3 months correlation between GDS and Data is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GDS Holdings and Data Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage 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 Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage has no effect on the direction of GDS Holdings i.e., GDS Holdings and Data Storage go up and down completely randomly.

Pair Corralation between GDS Holdings and Data Storage

Considering the 90-day investment horizon GDS Holdings is expected to generate 7.92 times less return on investment than Data Storage. But when comparing it to its historical volatility, GDS Holdings is 4.22 times less risky than Data Storage. It trades about 0.15 of its potential returns per unit of risk. Data Storage is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Data Storage on September 23, 2024 and sell it today you would earn a total of  27.00  from holding Data Storage or generate 69.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

GDS Holdings  vs.  Data Storage

GDS Holdings

Risk-Adjusted Performance

0 of 100

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.

Data Storage

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Data Storage showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GDS Holdings and Data Storage

The main advantage of trading using opposite GDS Holdings and Data Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDS Holdings position performs unexpectedly, Data Storage 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 Data Storage will offset losses from the drop in Data Storage's long position.

The idea behind GDS Holdings and Data Storage 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.