Correlation Between Western Digital and Kinea Creditas

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

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

Diversification Opportunities for Western Digital and Kinea Creditas

-0.56

Correlation Coefficient

Western Digital  Kinea Creditas

Excellent diversification

The 3 months correlation between Western and Kinea is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Kinea Creditas Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinea Creditas Fundo and Western Digital 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 Western Digital are associated (or correlated) with Kinea Creditas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinea Creditas Fundo has no effect on the direction of Western Digital i.e., Western Digital and Kinea Creditas go up and down completely randomly.

Pair Corralation between Western Digital and Kinea Creditas

Assuming the 90 days trading horizon Western Digital is expected to generate 1.98 times more return on investment than Kinea Creditas. However, Western Digital is 1.98 times more volatile than Kinea Creditas Fundo. It trades about 0.13 of its potential returns per unit of risk. Kinea Creditas Fundo is currently generating about -0.17 per unit of risk. If you would invest  36,225  in Western Digital on September 7, 2024 and sell it today you would earn a total of  6,990  from holding Western Digital or generate 19.3% return on investment over 90 days.

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

Western Digital  vs.  Kinea Creditas Fundo

Western Digital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Western Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Kinea Creditas Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinea Creditas Fundo 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.

Pair Trading with Western Digital and Kinea Creditas

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

The idea behind Western Digital and Kinea Creditas 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.