Correlation Between KILIMA VOLKANO and Rec Fundo

Can any of the company-specific risk be diversified away by investing in both KILIMA VOLKANO and Rec 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 KILIMA VOLKANO and Rec Fundo 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 Rec Fundo De, you can compare the effects of market volatilities on KILIMA VOLKANO and Rec 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 KILIMA VOLKANO with a short position of Rec Fundo. Check out your portfolio center. Please also check ongoing floating volatility patterns of KILIMA VOLKANO and Rec Fundo.

Diversification Opportunities for KILIMA VOLKANO and Rec Fundo

0.42

Correlation Coefficient

KILIMA VOLKANO  Rec Fundo

Very weak diversification

The 3 months correlation between KILIMA and Rec is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding KILIMA VOLKANO RECEBVEIS and Rec Fundo De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rec Fundo De 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 Rec Fundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rec Fundo De has no effect on the direction of KILIMA VOLKANO i.e., KILIMA VOLKANO and Rec Fundo go up and down completely randomly.

Pair Corralation between KILIMA VOLKANO and Rec Fundo

Assuming the 90 days trading horizon KILIMA VOLKANO RECEBVEIS is expected to under-perform the Rec Fundo. But the fund apears to be less risky and, when comparing its historical volatility, KILIMA VOLKANO RECEBVEIS is 2.12 times less risky than Rec Fundo. The fund trades about -0.08 of its potential returns per unit of risk. The Rec Fundo De is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,469  in Rec Fundo De on September 4, 2024 and sell it today you would earn a total of  330.00  from holding Rec Fundo De or generate 5.1% return on investment over 90 days.

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

KILIMA VOLKANO RECEBVEIS  vs.  Rec Fundo De

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.

Rec Fundo De

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rec Fundo De are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental indicators, Rec Fundo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KILIMA VOLKANO and Rec Fundo

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

The idea behind KILIMA VOLKANO RECEBVEIS and Rec Fundo De 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.