Correlation Between Descartes Systems and Kingsoft Cloud

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

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

Diversification Opportunities for Descartes Systems and Kingsoft Cloud

0.54

Correlation Coefficient

Descartes Systems  Kingsoft Cloud

Very weak diversification

The 3 months correlation between Descartes and Kingsoft is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group 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 Descartes Systems 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 Descartes Systems Group 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 Descartes Systems i.e., Descartes Systems and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between Descartes Systems and Kingsoft Cloud

Given the investment horizon of 90 days Descartes Systems Group is expected to generate 0.51 times more return on investment than Kingsoft Cloud. However, Descartes Systems Group is 1.97 times less risky than Kingsoft Cloud. It trades about 0.08 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  9,240  in Descartes Systems Group on January 26, 2024 and sell it today you would earn a total of  210.00  from holding Descartes Systems Group or generate 2.27% return on investment over 90 days.

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

Descartes Systems Group  vs.  Kingsoft Cloud HoldingsLtd

Descartes Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Descartes Systems Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Descartes Systems is not utilizing all of its potentials. The latest stock price disturbance, 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 Descartes Systems and Kingsoft Cloud

The main advantage of trading using opposite Descartes Systems and Kingsoft Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Descartes Systems 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 Descartes Systems Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.