Correlation Between Kingsoft Cloud and Small Cap

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

By analyzing existing cross correlation between Kingsoft Cloud Holdings and Small Cap Core, you can compare the effects of market volatilities on Kingsoft Cloud and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsoft Cloud and Small Cap.

Diversification Opportunities for Kingsoft Cloud and Small Cap

0.0

Correlation Coefficient

Kingsoft Cloud  Small Cap

Pay attention - limited upside

The 3 months correlation between Kingsoft and Small is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kingsoft Cloud Holdings and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Holdings are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Kingsoft Cloud i.e., Kingsoft Cloud and Small Cap go up and down completely randomly.

Pair Corralation between Kingsoft Cloud and Small Cap

Allowing for the 90-day total investment horizon Kingsoft Cloud Holdings is expected to under-perform the Small Cap. In addition to that, Kingsoft Cloud is 6.13 times more volatile than Small Cap Core. It trades about -0.05 of its total potential returns per unit of risk. Small Cap Core is currently generating about 0.3 per unit of volatility. If you would invest  1,229  in Small Cap Core on March 18, 2024 and sell it today you would earn a total of  76.00  from holding Small Cap Core or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	11.06%
Values	Daily Returns

Kingsoft Cloud Holdings  vs.  Small Cap Core

Kingsoft Cloud Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Kingsoft Cloud Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Small Cap Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Cap Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Small Cap is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kingsoft Cloud and Small Cap

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

The idea behind Kingsoft Cloud Holdings and Small Cap Core 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.