Correlation Between Civeo Corp and GDS Holdings

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

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

Diversification Opportunities for Civeo Corp and GDS Holdings

0.52

Correlation Coefficient

Civeo Corp  GDS Holdings

Very weak diversification

The 3 months correlation between Civeo and GDS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Civeo Corp and GDS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDS Holdings and Civeo Corp 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 Civeo Corp are associated (or correlated) with GDS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDS Holdings has no effect on the direction of Civeo Corp i.e., Civeo Corp and GDS Holdings go up and down completely randomly.

Pair Corralation between Civeo Corp and GDS Holdings

Given the investment horizon of 90 days Civeo Corp is expected to under-perform the GDS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Civeo Corp is 1.67 times less risky than GDS Holdings. The stock trades about -0.23 of its potential returns per unit of risk. The GDS Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,871  in GDS Holdings on September 25, 2024 and sell it today you would earn a total of  94.00  from holding GDS Holdings or generate 5.02% return on investment over 90 days.

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

Civeo Corp  vs.  GDS Holdings

Civeo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civeo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GDS Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GDS Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Civeo Corp and GDS Holdings

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

The idea behind Civeo Corp and GDS Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.