Correlation Between Kinea Renda and Energisa

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

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

Diversification Opportunities for Kinea Renda and Energisa

0.12

Correlation Coefficient

Kinea Renda  Energisa

Average diversification

The 3 months correlation between Kinea and Energisa is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Renda Imobiliria and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Kinea Renda 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 Renda Imobiliria are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Kinea Renda i.e., Kinea Renda and Energisa go up and down completely randomly.

Pair Corralation between Kinea Renda and Energisa

Assuming the 90 days trading horizon Kinea Renda is expected to generate 26.07 times less return on investment than Energisa. But when comparing it to its historical volatility, Kinea Renda Imobiliria is 1.7 times less risky than Energisa. It trades about 0.01 of its potential returns per unit of risk. Energisa SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,719  in Energisa SA on December 25, 2024 and sell it today you would earn a total of  383.00  from holding Energisa SA or generate 10.3% return on investment over 90 days.

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

Kinea Renda Imobiliria  vs.  Energisa SA

Kinea Renda Imobiliria

Risk-Adjusted Performance

Very Weak

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

Energisa SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Energisa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kinea Renda and Energisa

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

The idea behind Kinea Renda Imobiliria and Energisa SA 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.