Correlation Between Kuke Music and Charter Communications

Can any of the company-specific risk be diversified away by investing in both Kuke Music and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on Kuke Music and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuke Music and Charter Communications.

Diversification Opportunities for Kuke Music and Charter Communications

-0.43

Correlation Coefficient

Kuke Music  Charter Communications

Very good diversification

The 3 months correlation between Kuke and Charter is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kuke Music Holding and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Kuke Music i.e., Kuke Music and Charter Communications go up and down completely randomly.

Pair Corralation between Kuke Music and Charter Communications

Given the investment horizon of 90 days Kuke Music Holding is expected to generate 6.57 times more return on investment than Charter Communications. However, Kuke Music is 6.57 times more volatile than Charter Communications. It trades about 0.04 of its potential returns per unit of risk. Charter Communications is currently generating about 0.11 per unit of risk. If you would invest  347.00  in Kuke Music Holding on December 28, 2024 and sell it today you would lose (43.00) from holding Kuke Music Holding or give up 12.39% of portfolio value over 90 days.

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

Kuke Music Holding  vs.  Charter Communications

Kuke Music Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kuke Music Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, Kuke Music exhibited solid returns over the last few months and may actually be approaching a breakup point.

Charter Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kuke Music and Charter Communications

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

The idea behind Kuke Music Holding and Charter Communications 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.