Correlation Between SPARTA FIAGRO and KILIMA VOLKANO

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

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

Diversification Opportunities for SPARTA FIAGRO and KILIMA VOLKANO

0.89

Correlation Coefficient

SPARTA FIAGRO  KILIMA VOLKANO

Very poor diversification

The 3 months correlation between SPARTA and KILIMA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPARTA FIAGRO FDO 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 SPARTA FIAGRO 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 SPARTA FIAGRO FDO 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 SPARTA FIAGRO i.e., SPARTA FIAGRO and KILIMA VOLKANO go up and down completely randomly.

Pair Corralation between SPARTA FIAGRO and KILIMA VOLKANO

Assuming the 90 days trading horizon SPARTA FIAGRO FDO is expected to generate 0.57 times more return on investment than KILIMA VOLKANO. However, SPARTA FIAGRO FDO is 1.75 times less risky than KILIMA VOLKANO. It trades about -0.69 of its potential returns per unit of risk. KILIMA VOLKANO RECEBVEIS is currently generating about -0.61 per unit of risk. If you would invest  10,101  in SPARTA FIAGRO FDO on September 15, 2024 and sell it today you would lose (1,501) from holding SPARTA FIAGRO FDO or give up 14.86% of portfolio value over 90 days.

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

SPARTA FIAGRO FDO  vs.  KILIMA VOLKANO RECEBVEIS

SPARTA FIAGRO FDO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTA FIAGRO FDO has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

KILIMA VOLKANO RECEBVEIS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KILIMA VOLKANO RECEBVEIS has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with SPARTA FIAGRO and KILIMA VOLKANO

The main advantage of trading using opposite SPARTA FIAGRO and KILIMA VOLKANO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTA FIAGRO 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 SPARTA FIAGRO FDO 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.