Correlation Between Kinea Fundo and Energisa

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

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

Diversification Opportunities for Kinea Fundo and Energisa

0.87

Correlation Coefficient

Kinea Fundo  Energisa

Very poor diversification

The 3 months correlation between Kinea and Energisa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Fundo Fundos and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Kinea Fundo 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 Fundo Fundos are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Kinea Fundo i.e., Kinea Fundo and Energisa go up and down completely randomly.

Pair Corralation between Kinea Fundo and Energisa

Assuming the 90 days trading horizon Kinea Fundo Fundos is expected to under-perform the Energisa. But the fund apears to be less risky and, when comparing its historical volatility, Kinea Fundo Fundos is 1.24 times less risky than Energisa. The fund trades about -0.19 of its potential returns per unit of risk. The Energisa SA is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  4,533  in Energisa SA on September 21, 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

Kinea Fundo Fundos  vs.  Energisa SA

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.

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.

Pair Trading with Kinea Fundo and Energisa

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

The idea behind Kinea Fundo Fundos and Energisa SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.