Correlation Between Kinea Oportunidades and Energisa

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

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

Diversification Opportunities for Kinea Oportunidades and Energisa

0.91

Correlation Coefficient

Kinea Oportunidades  Energisa

Almost no diversification

The 3 months correlation between Kinea and Energisa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kinea Oportunidades Real and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Kinea Oportunidades 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 Oportunidades Real 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 Oportunidades i.e., Kinea Oportunidades and Energisa go up and down completely randomly.

Pair Corralation between Kinea Oportunidades and Energisa

Assuming the 90 days trading horizon Kinea Oportunidades Real is expected to under-perform the Energisa. In addition to that, Kinea Oportunidades is 1.18 times more volatile than Energisa SA. It trades about -0.18 of its total potential returns per unit of risk. Energisa SA is currently generating about -0.19 per unit of volatility. If you would invest  4,771  in Energisa SA on September 3, 2024 and sell it today you would lose (750.00) from holding Energisa SA or give up 15.72% of portfolio value over 90 days.

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

Kinea Oportunidades Real  vs.  Energisa SA

Kinea Oportunidades Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Oportunidades Real 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 Oportunidades and Energisa

The main advantage of trading using opposite Kinea Oportunidades and Energisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinea Oportunidades 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 Oportunidades Real 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.