Correlation Between Energisa and Kinea Fundo

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

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

Diversification Opportunities for Energisa and Kinea Fundo

0.89

Correlation Coefficient

Energisa  Kinea Fundo

Very poor diversification

The 3 months correlation between Energisa and Kinea is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Kinea Fundo Fundos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Fundo Fundos and Energisa 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 Energisa SA are associated (or correlated) with Kinea Fundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Fundo Fundos has no effect on the direction of Energisa i.e., Energisa and Kinea Fundo go up and down completely randomly.

Pair Corralation between Energisa and Kinea Fundo

Assuming the 90 days trading horizon Energisa SA is expected to generate 1.24 times more return on investment than Kinea Fundo. However, Energisa is 1.24 times more volatile than Kinea Fundo Fundos. It trades about -0.15 of its potential returns per unit of risk. Kinea Fundo Fundos is currently generating about -0.19 per unit of risk. If you would invest  4,533  in Energisa SA on September 22, 2024 and sell it today you would lose (651.00) from holding Energisa SA or give up 14.36% of portfolio value over 90 days.

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

Energisa SA  vs.  Kinea Fundo Fundos

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental 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 company investors.

Kinea Fundo Fundos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Fundo Fundos 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 Energisa and Kinea Fundo

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

The idea behind Energisa SA and Kinea Fundo Fundos 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.