Correlation Between Kuke Music and Dolphin Entertainment

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

Diversification Opportunities for Kuke Music and Dolphin Entertainment

-0.69

Correlation Coefficient

Kuke Music  Dolphin Entertainment

Excellent diversification

The 3 months correlation between Kuke and Dolphin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kuke Music Holding and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment 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 Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Kuke Music i.e., Kuke Music and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Kuke Music and Dolphin Entertainment

Given the investment horizon of 90 days Kuke Music Holding is expected to generate 3.74 times more return on investment than Dolphin Entertainment. However, Kuke Music is 3.74 times more volatile than Dolphin Entertainment. It trades about 0.15 of its potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.18 per unit of risk. If you would invest  192.00  in Kuke Music Holding on January 29, 2024 and sell it today you would earn a total of  58.00  from holding Kuke Music Holding or generate 30.21% return on investment over 90 days.

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

Kuke Music Holding  vs.  Dolphin Entertainment

Kuke Music Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kuke Music Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, Kuke Music exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kuke Music and Dolphin Entertainment

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

The idea behind Kuke Music Holding and Dolphin Entertainment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.