Correlation Between Kinea Oportunidades and Kinea Renda

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

Diversification Opportunities for Kinea Oportunidades and Kinea Renda

0.77

Correlation Coefficient

Kinea Oportunidades  Kinea Renda

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 Oportunidades Real and Kinea Renda Imobiliria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Renda Imobiliria 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 Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Renda Imobiliria has no effect on the direction of Kinea Oportunidades i.e., Kinea Oportunidades and Kinea Renda go up and down completely randomly.

Pair Corralation between Kinea Oportunidades and Kinea Renda

Assuming the 90 days trading horizon Kinea Oportunidades Real is expected to under-perform the Kinea Renda. In addition to that, Kinea Oportunidades is 1.57 times more volatile than Kinea Renda Imobiliria. It trades about -0.26 of its total potential returns per unit of risk. Kinea Renda Imobiliria is currently generating about -0.15 per unit of volatility. If you would invest  14,501  in Kinea Renda Imobiliria on September 14, 2024 and sell it today you would lose (1,501) from holding Kinea Renda Imobiliria or give up 10.35% 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 Renda Imobiliria

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.

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.

Pair Trading with Kinea Oportunidades and Kinea Renda

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

The idea behind Kinea Oportunidades Real and Kinea Renda Imobiliria 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.