Correlation Between Kinetics Internet and Central Europe

Can any of the company-specific risk be diversified away by investing in both Kinetics Internet and Central Europe 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 Kinetics Internet and Central Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Internet Fund and Central Europe Russia, you can compare the effects of market volatilities on Kinetics Internet and Central Europe 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 Kinetics Internet with a short position of Central Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Internet and Central Europe.

Diversification Opportunities for Kinetics Internet and Central Europe

-0.1

Correlation Coefficient

Kinetics Internet  Central Europe

Good diversification

The 3 months correlation between Kinetics and Central is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Internet Fund and Central Europe Russia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Europe Russia and Kinetics Internet 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 Kinetics Internet Fund are associated (or correlated) with Central Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Europe Russia has no effect on the direction of Kinetics Internet i.e., Kinetics Internet and Central Europe go up and down completely randomly.

Pair Corralation between Kinetics Internet and Central Europe

Assuming the 90 days horizon Kinetics Internet Fund is expected to under-perform the Central Europe. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kinetics Internet Fund is 1.54 times less risky than Central Europe. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Central Europe Russia is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,152  in Central Europe Russia on November 28, 2024 and sell it today you would earn a total of  334.00  from holding Central Europe Russia or generate 28.99% return on investment over 90 days.

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

Kinetics Internet Fund  vs.  Central Europe Russia

Kinetics Internet

Risk-Adjusted Performance

Very Weak

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

Central Europe Russia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Europe Russia are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile technical and fundamental indicators, Central Europe exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetics Internet and Central Europe

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

The idea behind Kinetics Internet Fund and Central Europe Russia 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.