Correlation Between Nice and Kingsoft Cloud

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

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

Diversification Opportunities for Nice and Kingsoft Cloud

0.18

Correlation Coefficient

Nice  Kingsoft Cloud

Average diversification

The 3 months correlation between Nice and Kingsoft is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nice Ltd ADR 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 Nice 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 Nice Ltd ADR 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 Nice i.e., Nice and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between Nice and Kingsoft Cloud

Given the investment horizon of 90 days Nice is expected to generate 44.08 times less return on investment than Kingsoft Cloud. But when comparing it to its historical volatility, Nice Ltd ADR is 3.52 times less risky than Kingsoft Cloud. It trades about 0.01 of its potential returns per unit of risk. Kingsoft Cloud HoldingsLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  276.00  in Kingsoft Cloud HoldingsLtd on February 15, 2024 and sell it today you would earn a total of  63.00  from holding Kingsoft Cloud HoldingsLtd or generate 22.83% return on investment over 90 days.

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

Nice Ltd ADR  vs.  Kingsoft Cloud HoldingsLtd

Nice Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nice Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Nice is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kingsoft Cloud Holdi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud HoldingsLtd are ranked lower than 6 (%) 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 Nice and Kingsoft Cloud

The main advantage of trading using opposite Nice and Kingsoft Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice 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 Nice Ltd ADR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.