Correlation Between Companhia Habitasul and Kinea Fundo

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

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

Diversification Opportunities for Companhia Habitasul and Kinea Fundo

0.78

Correlation Coefficient

Companhia Habitasul  Kinea Fundo

Poor diversification

The 3 months correlation between Companhia and Kinea is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Habitasul de 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 Companhia Habitasul 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 Companhia Habitasul de 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 Companhia Habitasul i.e., Companhia Habitasul and Kinea Fundo go up and down completely randomly.

Pair Corralation between Companhia Habitasul and Kinea Fundo

Assuming the 90 days trading horizon Companhia Habitasul de is expected to under-perform the Kinea Fundo. In addition to that, Companhia Habitasul is 2.79 times more volatile than Kinea Fundo Fundos. It trades about -0.13 of its total potential returns per unit of risk. Kinea Fundo Fundos is currently generating about -0.19 per unit of volatility. If you would invest  8,117  in Kinea Fundo Fundos on September 22, 2024 and sell it today you would lose (1,220) from holding Kinea Fundo Fundos or give up 15.03% of portfolio value over 90 days.

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

Companhia Habitasul de  vs.  Kinea Fundo Fundos

Companhia Habitasul

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Habitasul de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 Companhia Habitasul and Kinea Fundo

The main advantage of trading using opposite Companhia Habitasul and Kinea Fundo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Habitasul 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 Companhia Habitasul de 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.