Correlation Between LESTE FDO and Kinea Oportunidades

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

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

Diversification Opportunities for LESTE FDO and Kinea Oportunidades

0.83

Correlation Coefficient

LESTE FDO  Kinea Oportunidades

Very poor diversification

The 3 months correlation between LESTE and Kinea is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV 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 LESTE FDO 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 LESTE FDO INV 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 LESTE FDO i.e., LESTE FDO and Kinea Oportunidades go up and down completely randomly.

Pair Corralation between LESTE FDO and Kinea Oportunidades

Assuming the 90 days trading horizon LESTE FDO INV is expected to generate 0.81 times more return on investment than Kinea Oportunidades. However, LESTE FDO INV is 1.23 times less risky than Kinea Oportunidades. It trades about 0.18 of its potential returns per unit of risk. Kinea Oportunidades Real is currently generating about 0.06 per unit of risk. If you would invest  6,601  in LESTE FDO INV on December 30, 2024 and sell it today you would earn a total of  978.00  from holding LESTE FDO INV or generate 14.82% return on investment over 90 days.

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

LESTE FDO INV  vs.  Kinea Oportunidades Real

LESTE FDO INV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LESTE FDO INV are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, LESTE FDO sustained solid returns over the last few months and may actually be approaching a breakup point.

Kinea Oportunidades Real

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinea Oportunidades Real are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Kinea Oportunidades may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LESTE FDO and Kinea Oportunidades

The main advantage of trading using opposite LESTE FDO and Kinea Oportunidades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO 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 LESTE FDO INV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.