Correlation Between DLH Holdings and GDS Holdings

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

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

Diversification Opportunities for DLH Holdings and GDS Holdings

-0.91

Correlation Coefficient

DLH Holdings  GDS Holdings

Pay attention - limited upside

The 3 months correlation between DLH and GDS is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and GDS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDS Holdings and DLH 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 DLH Holdings 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 DLH Holdings i.e., DLH Holdings and GDS Holdings go up and down completely randomly.

Pair Corralation between DLH Holdings and GDS Holdings

Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the GDS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, DLH Holdings Corp is 2.59 times less risky than GDS Holdings. The stock trades about -0.36 of its potential returns per unit of risk. The GDS Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,318  in GDS Holdings on December 2, 2024 and sell it today you would earn a total of  1,487  from holding GDS Holdings or generate 64.15% return on investment over 90 days.

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

DLH Holdings Corp  vs.  GDS Holdings

DLH Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days DLH Holdings 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 indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GDS Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GDS Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, GDS Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DLH Holdings and GDS Holdings

The main advantage of trading using opposite DLH Holdings and GDS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DLH Holdings 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 DLH Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.