Correlation Between Kuke Music and Afya

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

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

Diversification Opportunities for Kuke Music and Afya

0.27

Correlation Coefficient

Kuke Music  Afya

Modest diversification

The 3 months correlation between Kuke and Afya is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kuke Music Holding and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and Kuke Music 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 Kuke Music Holding are associated (or correlated) with Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Kuke Music i.e., Kuke Music and Afya go up and down completely randomly.

Pair Corralation between Kuke Music and Afya

Given the investment horizon of 90 days Kuke Music Holding is expected to generate 3.61 times more return on investment than Afya. However, Kuke Music is 3.61 times more volatile than Afya. It trades about 0.04 of its potential returns per unit of risk. Afya is currently generating about 0.02 per unit of risk. If you would invest  60.00  in Kuke Music Holding on October 4, 2024 and sell it today you would lose (16.00) from holding Kuke Music Holding or give up 26.67% of portfolio value over 90 days.

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

Kuke Music Holding  vs.  Afya

Kuke Music Holding

Risk-Adjusted Performance

0 of 100

Very 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 latest conflicting performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Afya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kuke Music and Afya

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

The idea behind Kuke Music Holding and Afya 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.