Correlation Between Hackett and VNET Group

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

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

Diversification Opportunities for Hackett and VNET Group

-0.07

Correlation Coefficient

Hackett  VNET Group

Good diversification

The 3 months correlation between Hackett and VNET is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group 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 Hackett 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 The Hackett Group 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 Hackett i.e., Hackett and VNET Group go up and down completely randomly.

Pair Corralation between Hackett and VNET Group

Given the investment horizon of 90 days Hackett is expected to generate 152.09 times less return on investment than VNET Group. But when comparing it to its historical volatility, The Hackett Group is 5.09 times less risky than VNET Group. It trades about 0.01 of its potential returns per unit of risk. VNET Group DRC is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  506.00  in VNET Group DRC on December 3, 2024 and sell it today you would earn a total of  667.00  from holding VNET Group DRC or generate 131.82% return on investment over 90 days.

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

The Hackett Group  vs.  VNET Group DRC

Hackett Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hackett Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Hackett is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

VNET Group DRC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 24 (%) 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 Hackett and VNET Group

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

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.