Correlation Between American Virtual and Chindata Group

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Can any of the company-specific risk be diversified away by investing in both American Virtual and Chindata 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 American Virtual and Chindata Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Virtual Cloud and Chindata Group Holdings, you can compare the effects of market volatilities on American Virtual and Chindata 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 American Virtual with a short position of Chindata Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Virtual and Chindata Group.

Diversification Opportunities for American Virtual and Chindata Group

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between American and Chindata is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Virtual Cloud and Chindata Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chindata Group Holdings and American Virtual 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 American Virtual Cloud are associated (or correlated) with Chindata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chindata Group Holdings has no effect on the direction of American Virtual i.e., American Virtual and Chindata Group go up and down completely randomly.

Pair Corralation between American Virtual and Chindata Group

Given the investment horizon of 90 days American Virtual Cloud is expected to under-perform the Chindata Group. In addition to that, American Virtual is 1.43 times more volatile than Chindata Group Holdings. It trades about -0.09 of its total potential returns per unit of risk. Chindata Group Holdings is currently generating about -0.01 per unit of volatility. If you would invest  1,525  in Chindata Group Holdings on May 21, 2022 and sell it today you would lose (773.00)  from holding Chindata Group Holdings or give up 50.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

American Virtual Cloud  vs.  Chindata Group Holdings

 Performance (%) 
       Timeline  
American Virtual Cloud 
American Performance
0 of 100
Over the last 90 days American Virtual Cloud has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in September 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

American Price Channel

Chindata Group Holdings 
Chindata Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chindata Group Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Chindata Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chindata Price Channel

American Virtual and Chindata Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Virtual and Chindata Group

The main advantage of trading using opposite American Virtual and Chindata Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Virtual position performs unexpectedly, Chindata 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 Chindata Group will offset losses from the drop in Chindata Group's long position.
The idea behind American Virtual Cloud and Chindata Group 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.
Check out your portfolio center. 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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