Correlation Between Gaia and Kuke Music

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

By analyzing existing cross correlation between Gaia Inc and Kuke Music Holding, you can compare the effects of market volatilities on Gaia and Kuke Music 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 Gaia with a short position of Kuke Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaia and Kuke Music.

Diversification Opportunities for Gaia and Kuke Music

0.47

Correlation Coefficient

Gaia  Kuke Music

Very weak diversification

The 3 months correlation between Gaia and Kuke is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Gaia Inc and Kuke Music Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuke Music Holding and Gaia 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 Gaia Inc are associated (or correlated) with Kuke Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuke Music Holding has no effect on the direction of Gaia i.e., Gaia and Kuke Music go up and down completely randomly.

Pair Corralation between Gaia and Kuke Music

Given the investment horizon of 90 days Gaia Inc is expected to under-perform the Kuke Music. But the stock apears to be less risky and, when comparing its historical volatility, Gaia Inc is 3.26 times less risky than Kuke Music. The stock trades about -0.06 of its potential returns per unit of risk. The Kuke Music Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Kuke Music Holding on December 26, 2024 and sell it today you would lose (106.00) from holding Kuke Music Holding or give up 30.29% of portfolio value over 90 days.

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

Gaia Inc  vs.  Kuke Music Holding

Gaia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kuke Music Holding

Risk-Adjusted Performance

Weak

Over the last 90 days Kuke Music Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Kuke Music is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gaia and Kuke Music

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

The idea behind Gaia Inc and Kuke Music Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.