Correlation Between Full Truck and Kingsoft Cloud

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

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

Diversification Opportunities for Full Truck and Kingsoft Cloud

0.81

Correlation Coefficient

Full Truck  Kingsoft Cloud

Very poor diversification

The 3 months correlation between Full and Kingsoft is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance 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 Full Truck 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 Full Truck Alliance 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 Full Truck i.e., Full Truck and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between Full Truck and Kingsoft Cloud

Considering the 90-day investment horizon Full Truck is expected to generate 7.05 times less return on investment than Kingsoft Cloud. But when comparing it to its historical volatility, Full Truck Alliance is 2.62 times less risky than Kingsoft Cloud. It trades about 0.1 of its potential returns per unit of risk. Kingsoft Cloud Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  669.00  in Kingsoft Cloud Holdings on November 29, 2024 and sell it today you would earn a total of  1,211  from holding Kingsoft Cloud Holdings or generate 181.02% return on investment over 90 days.

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

Full Truck Alliance  vs.  Kingsoft Cloud Holdings

Full Truck Alliance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Full Truck displayed solid returns over the last few months and may actually be approaching a breakup point.

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 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 Full Truck and Kingsoft Cloud

The main advantage of trading using opposite Full Truck and Kingsoft Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Full Truck 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 Full Truck Alliance 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.