Correlation Between Wilhelmina and GDS Holdings

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

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

Diversification Opportunities for Wilhelmina and GDS Holdings

-0.78

Correlation Coefficient

Wilhelmina  GDS Holdings

Pay attention - limited upside

The 3 months correlation between Wilhelmina and GDS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and GDS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDS Holdings and Wilhelmina 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 Wilhelmina 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 Wilhelmina i.e., Wilhelmina and GDS Holdings go up and down completely randomly.

Pair Corralation between Wilhelmina and GDS Holdings

Given the investment horizon of 90 days Wilhelmina is expected to generate 1.12 times less return on investment than GDS Holdings. But when comparing it to its historical volatility, Wilhelmina is 1.13 times less risky than GDS Holdings. It trades about 0.02 of its potential returns per unit of risk. GDS Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,406  in GDS Holdings on September 12, 2024 and sell it today you would lose (332.00) from holding GDS Holdings or give up 13.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.16%
Values	Daily Returns

Wilhelmina  vs.  GDS Holdings

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Wilhelmina is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

GDS Holdings

Risk-Adjusted Performance

8 of 100

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 Wilhelmina and GDS Holdings

The main advantage of trading using opposite Wilhelmina and GDS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilhelmina 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 Wilhelmina 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.