Correlation Between WPP PLC and Kuke Music
Can any of the company-specific risk be diversified away by investing in both WPP PLC and Kuke Music 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 WPP PLC and Kuke Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP PLC ADR and Kuke Music Holding, you can compare the effects of market volatilities on WPP PLC and Kuke Music 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 WPP PLC with a short position of Kuke Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Kuke Music.
Diversification Opportunities for WPP PLC and Kuke Music
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WPP and Kuke is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Kuke Music Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuke Music Holding and WPP PLC 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 WPP PLC ADR are associated (or correlated) with Kuke Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuke Music Holding has no effect on the direction of WPP PLC i.e., WPP PLC and Kuke Music go up and down completely randomly.
Pair Corralation between WPP PLC and Kuke Music
Considering the 90-day investment horizon WPP PLC ADR is expected to generate 0.1 times more return on investment than Kuke Music. However, WPP PLC ADR is 9.7 times less risky than Kuke Music. It trades about 0.07 of its potential returns per unit of risk. Kuke Music Holding is currently generating about -0.06 per unit of risk. If you would invest 5,018 in WPP PLC ADR on August 23, 2024 and sell it today you would earn a total of 130.00 from holding WPP PLC ADR or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC ADR vs. Kuke Music Holding
Performance |
| Timeline |
| WPP PLC ADR |
| Kuke Music Holding |
WPP PLC and Kuke Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Kuke Music
The main advantage of trading using opposite WPP PLC and Kuke Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, Kuke Music 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 Kuke Music will offset losses from the drop in Kuke Music's long position.The idea behind WPP PLC ADR and Kuke Music Holding 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.| Kuke Music vs. Cinemark Holdings | Kuke Music vs. News Corp B | Kuke Music vs. Marcus | Kuke Music vs. Liberty Media |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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