Correlation Between KILIMA VOLKANO and ASA METROPOLIS

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

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

Diversification Opportunities for KILIMA VOLKANO and ASA METROPOLIS

0.44

Correlation Coefficient

KILIMA VOLKANO  ASA METROPOLIS

Very weak diversification

The 3 months correlation between KILIMA and ASA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KILIMA VOLKANO RECEBVEIS and ASA METROPOLIS FUNDO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASA METROPOLIS FUNDO and KILIMA VOLKANO 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 KILIMA VOLKANO RECEBVEIS are associated (or correlated) with ASA METROPOLIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASA METROPOLIS FUNDO has no effect on the direction of KILIMA VOLKANO i.e., KILIMA VOLKANO and ASA METROPOLIS go up and down completely randomly.

Pair Corralation between KILIMA VOLKANO and ASA METROPOLIS

Assuming the 90 days trading horizon KILIMA VOLKANO RECEBVEIS is expected to under-perform the ASA METROPOLIS. But the fund apears to be less risky and, when comparing its historical volatility, KILIMA VOLKANO RECEBVEIS is 1.27 times less risky than ASA METROPOLIS. The fund trades about -0.18 of its potential returns per unit of risk. The ASA METROPOLIS FUNDO is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,860  in ASA METROPOLIS FUNDO on September 12, 2024 and sell it today you would lose (284.00) from holding ASA METROPOLIS FUNDO or give up 7.36% of portfolio value over 90 days.

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

KILIMA VOLKANO RECEBVEIS  vs.  ASA METROPOLIS FUNDO

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 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.

ASA METROPOLIS FUNDO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASA METROPOLIS FUNDO has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong primary indicators, ASA METROPOLIS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KILIMA VOLKANO and ASA METROPOLIS

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

The idea behind KILIMA VOLKANO RECEBVEIS and ASA METROPOLIS FUNDO 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.