Correlation Between Kinea II and Kinea Securities

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

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

Diversification Opportunities for Kinea II and Kinea Securities

0.17

Correlation Coefficient

Kinea II  Kinea Securities

Average diversification

The 3 months correlation between Kinea and Kinea is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kinea II Real and Kinea Securities Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Securities Fundo and Kinea II 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 II Real are associated (or correlated) with Kinea Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Securities Fundo has no effect on the direction of Kinea II i.e., Kinea II and Kinea Securities go up and down completely randomly.

Pair Corralation between Kinea II and Kinea Securities

Assuming the 90 days trading horizon Kinea II is expected to generate 11.2 times less return on investment than Kinea Securities. In addition to that, Kinea II is 5.13 times more volatile than Kinea Securities Fundo. It trades about 0.0 of its total potential returns per unit of risk. Kinea Securities Fundo is currently generating about 0.08 per unit of volatility. If you would invest  806.00  in Kinea Securities Fundo on December 4, 2024 and sell it today you would earn a total of  53.00  from holding Kinea Securities Fundo or generate 6.58% return on investment over 90 days.

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

Kinea II Real  vs.  Kinea Securities Fundo

Kinea II Real

Risk-Adjusted Performance

Very Weak

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

Kinea Securities Fundo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinea Securities Fundo are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Kinea Securities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kinea II and Kinea Securities

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

The idea behind Kinea II Real and Kinea Securities Fundo 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.