Correlation Between Kuke Music and Smart Digital

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

Diversification Opportunities for Kuke Music and Smart Digital

-0.66

Correlation Coefficient

Kuke Music  Smart Digital

Excellent diversification

The 3 months correlation between Kuke and Smart is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kuke Music Holding and Smart Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Digital Group 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 Smart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Digital Group has no effect on the direction of Kuke Music i.e., Kuke Music and Smart Digital go up and down completely randomly.

Pair Corralation between Kuke Music and Smart Digital

Given the investment horizon of 90 days Kuke Music Holding is expected to under-perform the Smart Digital. But the stock apears to be less risky and, when comparing its historical volatility, Kuke Music Holding is 4.95 times less risky than Smart Digital. The stock trades about -0.39 of its potential returns per unit of risk. The Smart Digital Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  503.00  in Smart Digital Group on May 13, 2025 and sell it today you would earn a total of  530.00  from holding Smart Digital Group or generate 105.37% 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.  Smart Digital Group

Kuke Music Holding

Risk-Adjusted Performance

Weakest

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 weak performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Smart Digital Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuke Music and Smart Digital

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

The idea behind Kuke Music Holding and Smart Digital Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.