Correlation Between LSI Industries and Kingsoft Cloud

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

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

Diversification Opportunities for LSI Industries and Kingsoft Cloud

0.33

Correlation Coefficient

LSI Industries  Kingsoft Cloud

Weak diversification

The 3 months correlation between LSI and Kingsoft is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LSI Industries and Kingsoft Cloud Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsoft Cloud Holdings and LSI Industries 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 LSI Industries 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 Holdings has no effect on the direction of LSI Industries i.e., LSI Industries and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between LSI Industries and Kingsoft Cloud

Given the investment horizon of 90 days LSI Industries is expected to generate 0.4 times more return on investment than Kingsoft Cloud. However, LSI Industries is 2.5 times less risky than Kingsoft Cloud. It trades about 0.05 of its potential returns per unit of risk. Kingsoft Cloud Holdings is currently generating about -0.07 per unit of risk. If you would invest  1,410  in LSI Industries on March 12, 2024 and sell it today you would earn a total of  74.00  from holding LSI Industries or generate 5.25% return on investment over 90 days.

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

LSI Industries  vs.  Kingsoft Cloud Holdings

LSI Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LSI Industries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kingsoft Cloud Holdings

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LSI Industries and Kingsoft Cloud

The main advantage of trading using opposite LSI Industries and Kingsoft Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Industries 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 LSI Industries and Kingsoft Cloud 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.