Correlation Between BTG Pactual and Kinea Securities

Can any of the company-specific risk be diversified away by investing in both BTG Pactual and Kinea Securities 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 BTG Pactual and Kinea Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTG Pactual Logstica and Kinea Securities Fundo, you can compare the effects of market volatilities on BTG Pactual and Kinea Securities 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 BTG Pactual with a short position of Kinea Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and Kinea Securities.

Diversification Opportunities for BTG Pactual and Kinea Securities

0.8

Correlation Coefficient

BTG Pactual  Kinea Securities

Very poor diversification

The 3 months correlation between BTG and Kinea is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Kinea Securities Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Securities Fundo and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with Kinea Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Securities Fundo has no effect on the direction of BTG Pactual i.e., BTG Pactual and Kinea Securities go up and down completely randomly.

Pair Corralation between BTG Pactual and Kinea Securities

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 1.05 times more return on investment than Kinea Securities. However, BTG Pactual is 1.05 times more volatile than Kinea Securities Fundo. It trades about -0.12 of its potential returns per unit of risk. Kinea Securities Fundo is currently generating about -0.15 per unit of risk. If you would invest  10,000  in BTG Pactual Logstica on September 14, 2024 and sell it today you would lose (912.00) from holding BTG Pactual Logstica or give up 9.12% of portfolio value over 90 days.

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

BTG Pactual Logstica  vs.  Kinea Securities Fundo

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Kinea Securities Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Securities Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with BTG Pactual and Kinea Securities

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

The idea behind BTG Pactual Logstica and Kinea Securities Fundo 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.