Correlation Between Aspen Technology and Kingsoft Cloud

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

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

Diversification Opportunities for Aspen Technology and Kingsoft Cloud

0.25

Correlation Coefficient

Aspen Technology  Kingsoft Cloud

Modest diversification

The 3 months correlation between Aspen and Kingsoft is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Kingsoft Cloud HoldingsLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsoft Cloud Holdi and Aspen Technology 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 Aspen Technology are associated (or correlated) with Kingsoft Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsoft Cloud Holdi has no effect on the direction of Aspen Technology i.e., Aspen Technology and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between Aspen Technology and Kingsoft Cloud

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.63 times more return on investment than Kingsoft Cloud. However, Aspen Technology is 1.6 times less risky than Kingsoft Cloud. It trades about -0.05 of its potential returns per unit of risk. Kingsoft Cloud HoldingsLtd is currently generating about -0.04 per unit of risk. If you would invest  20,184  in Aspen Technology on January 26, 2024 and sell it today you would lose (473.00) from holding Aspen Technology or give up 2.34% of portfolio value over 90 days.

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

Aspen Technology  vs.  Kingsoft Cloud HoldingsLtd

Aspen Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kingsoft Cloud Holdi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud HoldingsLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Kingsoft Cloud exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen Technology and Kingsoft Cloud

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

The idea behind Aspen Technology and Kingsoft Cloud HoldingsLtd 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.