Correlation Between VNET Group and Soluna Holdings

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

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

Diversification Opportunities for VNET Group and Soluna Holdings

-0.34

Correlation Coefficient

VNET Group  Soluna Holdings

Very good diversification

The 3 months correlation between VNET and Soluna is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding VNET Group DRC and Soluna Holdings Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings Preferred and VNET Group 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 VNET Group DRC are associated (or correlated) with Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings Preferred has no effect on the direction of VNET Group i.e., VNET Group and Soluna Holdings go up and down completely randomly.

Pair Corralation between VNET Group and Soluna Holdings

Given the investment horizon of 90 days VNET Group is expected to generate 2.37 times less return on investment than Soluna Holdings. But when comparing it to its historical volatility, VNET Group DRC is 1.22 times less risky than Soluna Holdings. It trades about 0.08 of its potential returns per unit of risk. Soluna Holdings Preferred is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Soluna Holdings Preferred on October 5, 2024 and sell it today you would earn a total of  399.00  from holding Soluna Holdings Preferred or generate 82.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

VNET Group DRC  vs.  Soluna Holdings Preferred

VNET Group DRC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 6 (%) 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.

Soluna Holdings Preferred

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings Preferred are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Soluna Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VNET Group and Soluna Holdings

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

The idea behind VNET Group DRC and Soluna Holdings Preferred 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.