Correlation Between NAVI CRDITO and KILIMA VOLKANO

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

By analyzing existing cross correlation between NAVI CRDITO IMOBILIRIO and KILIMA VOLKANO RECEBVEIS, you can compare the effects of market volatilities on NAVI CRDITO and KILIMA VOLKANO 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 NAVI CRDITO with a short position of KILIMA VOLKANO. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAVI CRDITO and KILIMA VOLKANO.

Diversification Opportunities for NAVI CRDITO and KILIMA VOLKANO

0.71

Correlation Coefficient

NAVI CRDITO  KILIMA VOLKANO

Poor diversification

The 3 months correlation between NAVI and KILIMA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NAVI CRDITO IMOBILIRIO and KILIMA VOLKANO RECEBVEIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KILIMA VOLKANO RECEBVEIS and NAVI CRDITO 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 NAVI CRDITO IMOBILIRIO are associated (or correlated) with KILIMA VOLKANO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KILIMA VOLKANO RECEBVEIS has no effect on the direction of NAVI CRDITO i.e., NAVI CRDITO and KILIMA VOLKANO go up and down completely randomly.

Pair Corralation between NAVI CRDITO and KILIMA VOLKANO

Assuming the 90 days trading horizon NAVI CRDITO IMOBILIRIO is expected to under-perform the KILIMA VOLKANO. In addition to that, NAVI CRDITO is 1.03 times more volatile than KILIMA VOLKANO RECEBVEIS. It trades about -0.08 of its total potential returns per unit of risk. KILIMA VOLKANO RECEBVEIS is currently generating about -0.07 per unit of volatility. If you would invest  6,917  in KILIMA VOLKANO RECEBVEIS on October 9, 2024 and sell it today you would lose (717.00) from holding KILIMA VOLKANO RECEBVEIS or give up 10.37% of portfolio value over 90 days.

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

NAVI CRDITO IMOBILIRIO  vs.  KILIMA VOLKANO RECEBVEIS

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAVI CRDITO IMOBILIRIO 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.

KILIMA VOLKANO RECEBVEIS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KILIMA VOLKANO RECEBVEIS 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 NAVI CRDITO and KILIMA VOLKANO

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

The idea behind NAVI CRDITO IMOBILIRIO and KILIMA VOLKANO RECEBVEIS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.