Correlation Between GDS Holdings and WNS Holdings

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

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

Diversification Opportunities for GDS Holdings and WNS Holdings

0.52

Correlation Coefficient

GDS Holdings  WNS Holdings

Very weak diversification

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

Pair Corralation between GDS Holdings and WNS Holdings

Considering the 90-day investment horizon GDS Holdings is expected to generate 2.0 times more return on investment than WNS Holdings. However, GDS Holdings is 2.0 times more volatile than WNS Holdings. It trades about 0.17 of its potential returns per unit of risk. WNS Holdings is currently generating about 0.14 per unit of risk. If you would invest  2,008  in GDS Holdings on December 16, 2024 and sell it today you would earn a total of  1,519  from holding GDS Holdings or generate 75.65% return on investment over 90 days.

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

GDS Holdings  vs.  WNS Holdings

GDS Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GDS Holdings are ranked lower than 13 (%) 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.

WNS Holdings

Risk-Adjusted Performance

Good

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

Pair Trading with GDS Holdings and WNS Holdings

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

The idea behind GDS Holdings and WNS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.