Correlation Between Kingsoft Cloud and VTEX

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

Diversification Opportunities for Kingsoft Cloud and VTEX

-0.51

Correlation Coefficient

Kingsoft Cloud  VTEX

Excellent diversification

The 3 months correlation between Kingsoft and VTEX is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kingsoft Cloud Holdings and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX 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 VTEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTEX has no effect on the direction of Kingsoft Cloud i.e., Kingsoft Cloud and VTEX go up and down completely randomly.

Pair Corralation between Kingsoft Cloud and VTEX

Allowing for the 90-day total investment horizon Kingsoft Cloud Holdings is expected to generate 5.05 times more return on investment than VTEX. However, Kingsoft Cloud is 5.05 times more volatile than VTEX. It trades about 0.22 of its potential returns per unit of risk. VTEX is currently generating about -0.05 per unit of risk. If you would invest  223.00  in Kingsoft Cloud Holdings on September 3, 2024 and sell it today you would earn a total of  446.00  from holding Kingsoft Cloud Holdings or generate 200.0% return on investment over 90 days.

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

Kingsoft Cloud Holdings  vs.  VTEX

Kingsoft Cloud Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud Holdings are ranked lower than 17 (%) 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.

VTEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VTEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, VTEX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kingsoft Cloud and VTEX

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

The idea behind Kingsoft Cloud Holdings and VTEX 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.