Correlation Between KILIMA VOLKANO and HUSI11

Can any of the company-specific risk be diversified away by investing in both KILIMA VOLKANO and HUSI11 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 HUSI11 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 HUSI11, you can compare the effects of market volatilities on KILIMA VOLKANO and HUSI11 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 HUSI11. Check out your portfolio center. Please also check ongoing floating volatility patterns of KILIMA VOLKANO and HUSI11.

Diversification Opportunities for KILIMA VOLKANO and HUSI11

-0.45

Correlation Coefficient

KILIMA VOLKANO  HUSI11

Very good diversification

The 3 months correlation between KILIMA and HUSI11 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KILIMA VOLKANO RECEBVEIS and HUSI11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUSI11 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 HUSI11. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUSI11 has no effect on the direction of KILIMA VOLKANO i.e., KILIMA VOLKANO and HUSI11 go up and down completely randomly.

Pair Corralation between KILIMA VOLKANO and HUSI11

Assuming the 90 days trading horizon KILIMA VOLKANO RECEBVEIS is expected to under-perform the HUSI11. In addition to that, KILIMA VOLKANO is 1.18 times more volatile than HUSI11. It trades about -0.22 of its total potential returns per unit of risk. HUSI11 is currently generating about 0.05 per unit of volatility. If you would invest  117,488  in HUSI11 on September 16, 2024 and sell it today you would earn a total of  5,012  from holding HUSI11 or generate 4.27% return on investment over 90 days.

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

KILIMA VOLKANO RECEBVEIS  vs.  HUSI11

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.

HUSI11

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUSI11 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, HUSI11 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KILIMA VOLKANO and HUSI11

The main advantage of trading using opposite KILIMA VOLKANO and HUSI11 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KILIMA VOLKANO position performs unexpectedly, HUSI11 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 HUSI11 will offset losses from the drop in HUSI11's long position.

The idea behind KILIMA VOLKANO RECEBVEIS and HUSI11 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.