Correlation Between Kuke Music and Gaia

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

Diversification Opportunities for Kuke Music and Gaia

0.47

Correlation Coefficient

Kuke Music  Gaia

Very weak diversification

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

Pair Corralation between Kuke Music and Gaia

Given the investment horizon of 90 days Kuke Music Holding is expected to generate 3.26 times more return on investment than Gaia. However, Kuke Music is 3.26 times more volatile than Gaia Inc. It trades about 0.0 of its potential returns per unit of risk. Gaia Inc is currently generating about -0.06 per unit of risk. 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

Kuke Music Holding  vs.  Gaia Inc

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.

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.

Pair Trading with Kuke Music and Gaia

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

The idea behind Kuke Music Holding and Gaia Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.