Correlation Between VCI Global and GDS Holdings

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

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

Diversification Opportunities for VCI Global and GDS Holdings

-0.7

Correlation Coefficient

VCI Global  GDS Holdings

Excellent diversification

The 3 months correlation between VCI and GDS is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding VCI Global Limited and GDS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDS Holdings and VCI Global 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 VCI Global Limited 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 VCI Global i.e., VCI Global and GDS Holdings go up and down completely randomly.

Pair Corralation between VCI Global and GDS Holdings

Given the investment horizon of 90 days VCI Global Limited is expected to under-perform the GDS Holdings. In addition to that, VCI Global is 1.18 times more volatile than GDS Holdings. It trades about -0.12 of its total potential returns per unit of risk. GDS Holdings is currently generating about 0.11 per unit of volatility. If you would invest  1,968  in GDS Holdings on December 22, 2024 and sell it today you would earn a total of  799.00  from holding GDS Holdings or generate 40.6% return on investment over 90 days.

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

VCI Global Limited  vs.  GDS Holdings

VCI Global Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days VCI Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GDS Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDS Holdings are ranked lower than 8 (%) 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 VCI Global and GDS Holdings

The main advantage of trading using opposite VCI Global and GDS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VCI Global 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 VCI Global Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.