Correlation Between BB Renda and KILIMA VOLKANO

Can any of the company-specific risk be diversified away by investing in both BB Renda and KILIMA VOLKANO 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 BB Renda and KILIMA VOLKANO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BB Renda Corporativa and KILIMA VOLKANO RECEBVEIS, you can compare the effects of market volatilities on BB Renda and KILIMA VOLKANO 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 BB Renda with a short position of KILIMA VOLKANO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Renda and KILIMA VOLKANO.

Diversification Opportunities for BB Renda and KILIMA VOLKANO

0.72

Correlation Coefficient

BB Renda  KILIMA VOLKANO

Poor diversification

The 3 months correlation between BBRC11 and KILIMA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BB Renda Corporativa and KILIMA VOLKANO RECEBVEIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KILIMA VOLKANO RECEBVEIS and BB Renda 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 BB Renda Corporativa are associated (or correlated) with KILIMA VOLKANO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KILIMA VOLKANO RECEBVEIS has no effect on the direction of BB Renda i.e., BB Renda and KILIMA VOLKANO go up and down completely randomly.

Pair Corralation between BB Renda and KILIMA VOLKANO

Assuming the 90 days trading horizon BB Renda is expected to generate 2.37 times less return on investment than KILIMA VOLKANO. But when comparing it to its historical volatility, BB Renda Corporativa is 1.62 times less risky than KILIMA VOLKANO. It trades about 0.12 of its potential returns per unit of risk. KILIMA VOLKANO RECEBVEIS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,813  in KILIMA VOLKANO RECEBVEIS on December 29, 2024 and sell it today you would earn a total of  1,057  from holding KILIMA VOLKANO RECEBVEIS or generate 18.18% return on investment over 90 days.

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

BB Renda Corporativa  vs.  KILIMA VOLKANO RECEBVEIS

BB Renda Corporativa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BB Renda Corporativa are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, BB Renda may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KILIMA VOLKANO RECEBVEIS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KILIMA VOLKANO RECEBVEIS are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, KILIMA VOLKANO sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BB Renda and KILIMA VOLKANO

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

The idea behind BB Renda Corporativa and KILIMA VOLKANO RECEBVEIS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.