Correlation Between TKO Group and Bel Fuse

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

By analyzing existing cross correlation between TKO Group Holdings, and Bel Fuse A, you can compare the effects of market volatilities on TKO Group and Bel Fuse 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 TKO Group with a short position of Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKO Group and Bel Fuse.

Diversification Opportunities for TKO Group and Bel Fuse

-0.2

Correlation Coefficient

TKO Group  Bel Fuse

Good diversification

The 3 months correlation between TKO and Bel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding TKO Group Holdings, and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A and TKO Group 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 TKO Group Holdings, are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of TKO Group i.e., TKO Group and Bel Fuse go up and down completely randomly.

Pair Corralation between TKO Group and Bel Fuse

Considering the 90-day investment horizon TKO Group Holdings, is expected to generate 0.89 times more return on investment than Bel Fuse. However, TKO Group Holdings, is 1.12 times less risky than Bel Fuse. It trades about 0.06 of its potential returns per unit of risk. Bel Fuse A is currently generating about -0.13 per unit of risk. If you would invest  14,435  in TKO Group Holdings, on December 26, 2024 and sell it today you would earn a total of  1,025  from holding TKO Group Holdings, or generate 7.1% return on investment over 90 days.

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

TKO Group Holdings,  vs.  Bel Fuse A

TKO Group Holdings,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward-looking signals, TKO Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bel Fuse A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bel Fuse A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental 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 TKO Group and Bel Fuse

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

The idea behind TKO Group Holdings, and Bel Fuse A 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.