Correlation Between Digimarc and VNET Group

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

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

Diversification Opportunities for Digimarc and VNET Group

-0.63

Correlation Coefficient

Digimarc  VNET Group

Excellent diversification

The 3 months correlation between Digimarc and VNET is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc 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 Digimarc 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 Digimarc 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 Digimarc i.e., Digimarc and VNET Group go up and down completely randomly.

Pair Corralation between Digimarc and VNET Group

Given the investment horizon of 90 days Digimarc is expected to under-perform the VNET Group. In addition to that, Digimarc is 1.01 times more volatile than VNET Group DRC. It trades about -0.21 of its total potential returns per unit of risk. VNET Group DRC is currently generating about 0.15 per unit of volatility. If you would invest  502.00  in VNET Group DRC on December 28, 2024 and sell it today you would earn a total of  323.00  from holding VNET Group DRC or generate 64.34% return on investment over 90 days.

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

Digimarc  vs.  VNET Group DRC

Digimarc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digimarc 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 basic 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.

VNET Group DRC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, VNET Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digimarc and VNET Group

The main advantage of trading using opposite Digimarc and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc 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 Digimarc 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.