Correlation Between Kingsoft Cloud and AudioEye

Can any of the company-specific risk be diversified away by investing in both Kingsoft Cloud and AudioEye 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 AudioEye 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 AudioEye, you can compare the effects of market volatilities on Kingsoft Cloud and AudioEye 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 AudioEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsoft Cloud and AudioEye.

Diversification Opportunities for Kingsoft Cloud and AudioEye

0.58

Correlation Coefficient

Kingsoft Cloud  AudioEye

Very weak diversification

The 3 months correlation between Kingsoft and AudioEye is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kingsoft Cloud Holdings and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye 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 AudioEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioEye has no effect on the direction of Kingsoft Cloud i.e., Kingsoft Cloud and AudioEye go up and down completely randomly.

Pair Corralation between Kingsoft Cloud and AudioEye

Allowing for the 90-day total investment horizon Kingsoft Cloud Holdings is expected to generate 2.1 times more return on investment than AudioEye. However, Kingsoft Cloud is 2.1 times more volatile than AudioEye. It trades about 0.36 of its potential returns per unit of risk. AudioEye is currently generating about 0.16 per unit of risk. If you would invest  286.00  in Kingsoft Cloud Holdings on August 31, 2024 and sell it today you would earn a total of  415.00  from holding Kingsoft Cloud Holdings or generate 145.1% return on investment over 90 days.

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

Kingsoft Cloud Holdings  vs.  AudioEye

Kingsoft Cloud Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud Holdings are ranked lower than 18 (%) 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.

AudioEye

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AudioEye are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AudioEye exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingsoft Cloud and AudioEye

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

The idea behind Kingsoft Cloud Holdings and AudioEye 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.