Correlation Between Kingsoft Cloud and Fair Isaac

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

Diversification Opportunities for Kingsoft Cloud and Fair Isaac

-0.76

Correlation Coefficient

Kingsoft Cloud  Fair Isaac

Pay attention - limited upside

The 3 months correlation between Kingsoft and Fair is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kingsoft Cloud Holdings and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac has no effect on the direction of Kingsoft Cloud i.e., Kingsoft Cloud and Fair Isaac go up and down completely randomly.

Pair Corralation between Kingsoft Cloud and Fair Isaac

Allowing for the 90-day total investment horizon Kingsoft Cloud Holdings is expected to generate 3.14 times more return on investment than Fair Isaac. However, Kingsoft Cloud is 3.14 times more volatile than Fair Isaac. It trades about 0.11 of its potential returns per unit of risk. Fair Isaac is currently generating about -0.04 per unit of risk. If you would invest  1,146  in Kingsoft Cloud Holdings on December 28, 2024 and sell it today you would earn a total of  407.00  from holding Kingsoft Cloud Holdings or generate 35.51% return on investment over 90 days.

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

Kingsoft Cloud Holdings  vs.  Fair Isaac

Kingsoft Cloud Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud Holdings are ranked lower than 8 (%) 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.

Fair Isaac

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fair Isaac is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kingsoft Cloud and Fair Isaac

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

The idea behind Kingsoft Cloud Holdings and Fair Isaac 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.