Correlation Between KILIMA VOLKANO and HEDGE DESENVOLVIMENTO

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

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

Diversification Opportunities for KILIMA VOLKANO and HEDGE DESENVOLVIMENTO

0.7

Correlation Coefficient

KILIMA VOLKANO  HEDGE DESENVOLVIMENTO

Poor diversification

The 3 months correlation between KILIMA and HEDGE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KILIMA VOLKANO RECEBVEIS and HEDGE DESENVOLVIMENTO LOGSTICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDGE DESENVOLVIMENTO and KILIMA VOLKANO 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 KILIMA VOLKANO RECEBVEIS are associated (or correlated) with HEDGE DESENVOLVIMENTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDGE DESENVOLVIMENTO has no effect on the direction of KILIMA VOLKANO i.e., KILIMA VOLKANO and HEDGE DESENVOLVIMENTO go up and down completely randomly.

Pair Corralation between KILIMA VOLKANO and HEDGE DESENVOLVIMENTO

Assuming the 90 days trading horizon KILIMA VOLKANO RECEBVEIS is expected to under-perform the HEDGE DESENVOLVIMENTO. In addition to that, KILIMA VOLKANO is 1.37 times more volatile than HEDGE DESENVOLVIMENTO LOGSTICO. It trades about -0.22 of its total potential returns per unit of risk. HEDGE DESENVOLVIMENTO LOGSTICO is currently generating about -0.17 per unit of volatility. If you would invest  11,600  in HEDGE DESENVOLVIMENTO LOGSTICO on September 14, 2024 and sell it today you would lose (1,800) from holding HEDGE DESENVOLVIMENTO LOGSTICO or give up 15.52% of portfolio value over 90 days.

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

KILIMA VOLKANO RECEBVEIS  vs.  HEDGE DESENVOLVIMENTO LOGSTICO

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.

HEDGE DESENVOLVIMENTO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE DESENVOLVIMENTO LOGSTICO has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental 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 KILIMA VOLKANO and HEDGE DESENVOLVIMENTO

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

The idea behind KILIMA VOLKANO RECEBVEIS and HEDGE DESENVOLVIMENTO LOGSTICO 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.