Correlation Between Hudson Technologies and Kingsoft Cloud

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

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

Diversification Opportunities for Hudson Technologies and Kingsoft Cloud

-0.79

Correlation Coefficient

Hudson Technologies  Kingsoft Cloud

Pay attention - limited upside

The 3 months correlation between Hudson and Kingsoft is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies 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 Hudson Technologies 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 Hudson Technologies 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 Hudson Technologies i.e., Hudson Technologies and Kingsoft Cloud go up and down completely randomly.

Pair Corralation between Hudson Technologies and Kingsoft Cloud

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Kingsoft Cloud. But the stock apears to be less risky and, when comparing its historical volatility, Hudson Technologies is 2.73 times less risky than Kingsoft Cloud. The stock trades about -0.13 of its potential returns per unit of risk. The Kingsoft Cloud Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  233.00  in Kingsoft Cloud Holdings on August 30, 2024 and sell it today you would earn a total of  468.00  from holding Kingsoft Cloud Holdings or generate 200.86% return on investment over 90 days.

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

Hudson Technologies  vs.  Kingsoft Cloud Holdings

Hudson Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Hudson Technologies and Kingsoft Cloud

The main advantage of trading using opposite Hudson Technologies and Kingsoft Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies 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 Hudson Technologies 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.