Correlation Between Kuke Music and TKO Group

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

Diversification Opportunities for Kuke Music and TKO Group

0.03

Correlation Coefficient

Kuke Music  TKO Group

Significant diversification

The 3 months correlation between Kuke and TKO is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kuke Music Holding and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group Holdings, 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Kuke Music i.e., Kuke Music and TKO Group go up and down completely randomly.

Pair Corralation between Kuke Music and TKO Group

Given the investment horizon of 90 days Kuke Music Holding is expected to under-perform the TKO Group. In addition to that, Kuke Music is 4.68 times more volatile than TKO Group Holdings,. It trades about 0.0 of its total potential returns per unit of risk. TKO Group Holdings, is currently generating about 0.1 per unit of volatility. If you would invest  13,495  in TKO Group Holdings, on December 1, 2024 and sell it today you would earn a total of  1,569  from holding TKO Group Holdings, or generate 11.63% return on investment over 90 days.

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

Kuke Music Holding  vs.  TKO Group Holdings,

Kuke Music Holding

Risk-Adjusted Performance

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 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.

TKO Group Holdings,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, TKO Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuke Music and TKO Group

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

The idea behind Kuke Music Holding and TKO Group 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.