Correlation Between Kinea Renda and Kinea Oportunidades

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

Diversification Opportunities for Kinea Renda and Kinea Oportunidades

0.77

Correlation Coefficient

Kinea Renda  Kinea Oportunidades

Poor diversification

The 3 months correlation between Kinea and Kinea is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Renda Imobiliria and Kinea Oportunidades Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Oportunidades Real 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 Kinea Oportunidades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Oportunidades Real has no effect on the direction of Kinea Renda i.e., Kinea Renda and Kinea Oportunidades go up and down completely randomly.

Pair Corralation between Kinea Renda and Kinea Oportunidades

Assuming the 90 days trading horizon Kinea Renda Imobiliria is expected to under-perform the Kinea Oportunidades. But the fund apears to be less risky and, when comparing its historical volatility, Kinea Renda Imobiliria is 1.6 times less risky than Kinea Oportunidades. The fund trades about -0.11 of its potential returns per unit of risk. The Kinea Oportunidades Real is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  7,606  in Kinea Oportunidades Real on September 14, 2024 and sell it today you would lose (217.00) from holding Kinea Oportunidades Real or give up 2.85% of portfolio value over 90 days.

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

Kinea Renda Imobiliria  vs.  Kinea Oportunidades Real

Kinea Renda Imobiliria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Renda Imobiliria has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Kinea Oportunidades Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Oportunidades 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 Renda and Kinea Oportunidades

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

The idea behind Kinea Renda Imobiliria and Kinea Oportunidades 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .