Correlation Between Kingsoft Cloud and Geo

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

Diversification Opportunities for Kingsoft Cloud and Geo

-0.34

Correlation Coefficient

Kingsoft Cloud  Geo

Very good diversification

The 3 months correlation between Kingsoft and Geo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kingsoft Cloud Holdings and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Kingsoft Cloud i.e., Kingsoft Cloud and Geo go up and down completely randomly.

Pair Corralation between Kingsoft Cloud and Geo

Allowing for the 90-day total investment horizon Kingsoft Cloud Holdings is expected to generate 2.88 times more return on investment than Geo. However, Kingsoft Cloud is 2.88 times more volatile than Geo Group. It trades about 0.19 of its potential returns per unit of risk. Geo Group is currently generating about -0.21 per unit of risk. If you would invest  1,257  in Kingsoft Cloud Holdings on December 2, 2024 and sell it today you would earn a total of  376.00  from holding Kingsoft Cloud Holdings or generate 29.91% return on investment over 90 days.

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

Kingsoft Cloud Holdings  vs.  Geo Group

Kingsoft Cloud Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud Holdings are ranked lower than 16 (%) 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.

Geo Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Geo 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 Geo

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

The idea behind Kingsoft Cloud Holdings and Geo Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..