Correlation Between Kinea Oportunidades and Kinea Creditas

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

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

Diversification Opportunities for Kinea Oportunidades and Kinea Creditas

0.69

Correlation Coefficient

Kinea Oportunidades  Kinea Creditas

Poor diversification

The 3 months correlation between Kinea and Kinea is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Oportunidades Real and Kinea Creditas Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Creditas Fundo and Kinea Oportunidades 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 Oportunidades Real are associated (or correlated) with Kinea Creditas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Creditas Fundo has no effect on the direction of Kinea Oportunidades i.e., Kinea Oportunidades and Kinea Creditas go up and down completely randomly.

Pair Corralation between Kinea Oportunidades and Kinea Creditas

Assuming the 90 days trading horizon Kinea Oportunidades Real is expected to under-perform the Kinea Creditas. In addition to that, Kinea Oportunidades is 1.25 times more volatile than Kinea Creditas Fundo. It trades about -0.1 of its total potential returns per unit of risk. Kinea Creditas Fundo is currently generating about -0.07 per unit of volatility. If you would invest  872.00  in Kinea Creditas Fundo on October 20, 2024 and sell it today you would lose (57.00) from holding Kinea Creditas Fundo or give up 6.54% of portfolio value over 90 days.

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

Kinea Oportunidades Real  vs.  Kinea Creditas Fundo

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 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 Creditas Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Creditas Fundo 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.

Pair Trading with Kinea Oportunidades and Kinea Creditas

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

The idea behind Kinea Oportunidades Real and Kinea Creditas 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.