Correlation Between Kinea Rendimentos and Telefonaktiebolaget

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

By analyzing existing cross correlation between Kinea Rendimentos Imobilirios and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Kinea Rendimentos and Telefonaktiebolaget 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 Rendimentos with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinea Rendimentos and Telefonaktiebolaget.

Diversification Opportunities for Kinea Rendimentos and Telefonaktiebolaget

-0.58

Correlation Coefficient

Kinea Rendimentos  Telefonaktiebolaget

Excellent diversification

The 3 months correlation between Kinea and Telefonaktiebolaget is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Rendimentos Imobilirios and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Kinea Rendimentos 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 Rendimentos Imobilirios are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Kinea Rendimentos i.e., Kinea Rendimentos and Telefonaktiebolaget go up and down completely randomly.

Pair Corralation between Kinea Rendimentos and Telefonaktiebolaget

Assuming the 90 days trading horizon Kinea Rendimentos Imobilirios is expected to under-perform the Telefonaktiebolaget. But the fund apears to be less risky and, when comparing its historical volatility, Kinea Rendimentos Imobilirios is 2.69 times less risky than Telefonaktiebolaget. The fund trades about -0.13 of its potential returns per unit of risk. The Telefonaktiebolaget LM Ericsson is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,014  in Telefonaktiebolaget LM Ericsson on September 20, 2024 and sell it today you would earn a total of  515.00  from holding Telefonaktiebolaget LM Ericsson or generate 25.57% return on investment over 90 days.

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

Kinea Rendimentos Imobilirios  vs.  Telefonaktiebolaget LM Ericsso

Kinea Rendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Rendimentos Imobilirios has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Telefonaktiebolaget

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonaktiebolaget LM Ericsson are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Telefonaktiebolaget sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinea Rendimentos and Telefonaktiebolaget

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

The idea behind Kinea Rendimentos Imobilirios and Telefonaktiebolaget LM Ericsson 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.