Correlation Between Kinea Rendimentos and Kinea II

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

By analyzing existing cross correlation between Kinea Rendimentos Imobilirios and Kinea II Real, you can compare the effects of market volatilities on Kinea Rendimentos and Kinea II 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 Kinea Rendimentos with a short position of Kinea II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinea Rendimentos and Kinea II.

Diversification Opportunities for Kinea Rendimentos and Kinea II

0.42

Correlation Coefficient

Kinea Rendimentos  Kinea II

Very weak diversification

The 3 months correlation between Kinea and Kinea is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Rendimentos Imobilirios and Kinea II Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea II Real and Kinea Rendimentos 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 Kinea Rendimentos Imobilirios are associated (or correlated) with Kinea II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea II Real has no effect on the direction of Kinea Rendimentos i.e., Kinea Rendimentos and Kinea II go up and down completely randomly.

Pair Corralation between Kinea Rendimentos and Kinea II

Assuming the 90 days trading horizon Kinea Rendimentos Imobilirios is expected to generate 0.11 times more return on investment than Kinea II. However, Kinea Rendimentos Imobilirios is 8.99 times less risky than Kinea II. It trades about -0.1 of its potential returns per unit of risk. Kinea II Real is currently generating about -0.11 per unit of risk. If you would invest  10,301  in Kinea Rendimentos Imobilirios on September 14, 2024 and sell it today you would lose (521.00) from holding Kinea Rendimentos Imobilirios or give up 5.06% of portfolio value over 90 days.

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

Kinea Rendimentos Imobilirios  vs.  Kinea II Real

Kinea Rendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Rendimentos Imobilirios has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, Kinea Rendimentos is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinea II Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea II Real 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 Kinea Rendimentos and Kinea II

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

The idea behind Kinea Rendimentos Imobilirios and Kinea II Real 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.