Correlation Between NL Industries and Kingsoft Cloud

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

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

Diversification Opportunities for NL Industries and Kingsoft Cloud

0.59

Correlation Coefficient

NL Industries  Kingsoft Cloud

Very weak diversification

The 3 months correlation between NL Industries and Kingsoft is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Kingsoft Cloud Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsoft Cloud Holdings and NL Industries 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 NL Industries 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 Holdings has no effect on the direction of NL Industries i.e., NL Industries and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between NL Industries and Kingsoft Cloud

Allowing for the 90-day total investment horizon NL Industries is expected to generate 574.43 times less return on investment than Kingsoft Cloud. But when comparing it to its historical volatility, NL Industries is 2.39 times less risky than Kingsoft Cloud. It trades about 0.0 of its potential returns per unit of risk. Kingsoft Cloud Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  721.00  in Kingsoft Cloud Holdings on September 23, 2024 and sell it today you would earn a total of  237.00  from holding Kingsoft Cloud Holdings or generate 32.87% return on investment over 90 days.

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

NL Industries  vs.  Kingsoft Cloud Holdings

NL Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, NL Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kingsoft Cloud Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsoft Cloud Holdings are ranked lower than 21 (%) 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 NL Industries and Kingsoft Cloud

The main advantage of trading using opposite NL Industries and Kingsoft Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries 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 NL Industries and Kingsoft Cloud Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.