Correlation Between Kingsoft Cloud and QuhuoLtd

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

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

Diversification Opportunities for Kingsoft Cloud and QuhuoLtd

-0.08

Correlation Coefficient

Kingsoft Cloud  QuhuoLtd

Good diversification

The 3 months correlation between Kingsoft and QuhuoLtd is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kingsoft Cloud HoldingsLtd and QuhuoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuhuoLtd and Kingsoft Cloud 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 Kingsoft Cloud HoldingsLtd are associated (or correlated) with QuhuoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuhuoLtd has no effect on the direction of Kingsoft Cloud i.e., Kingsoft Cloud and QuhuoLtd go up and down completely randomly.

Pair Corralation between Kingsoft Cloud and QuhuoLtd

Allowing for the 90-day total investment horizon Kingsoft Cloud HoldingsLtd is expected to generate 0.71 times more return on investment than QuhuoLtd. However, Kingsoft Cloud HoldingsLtd is 1.41 times less risky than QuhuoLtd. It trades about 0.01 of its potential returns per unit of risk. QuhuoLtd is currently generating about -0.03 per unit of risk. If you would invest  482.00  in Kingsoft Cloud HoldingsLtd on January 20, 2024 and sell it today you would lose (216.00) from holding Kingsoft Cloud HoldingsLtd or give up 44.81% of portfolio value over 90 days.

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

Kingsoft Cloud HoldingsLtd  vs.  QuhuoLtd

Kingsoft Cloud Holdi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud HoldingsLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Kingsoft Cloud may actually be approaching a critical reversion point that can send shares even higher in May 2024.

QuhuoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QuhuoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kingsoft Cloud and QuhuoLtd

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

The idea behind Kingsoft Cloud HoldingsLtd and QuhuoLtd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.