Correlation Between Kaufman Broad and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Kaufman Broad and Lion Biotechnologies 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 Kaufman Broad and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaufman Broad SA and Lion Biotechnologies, you can compare the effects of market volatilities on Kaufman Broad and Lion Biotechnologies 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 Kaufman Broad with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Broad and Lion Biotechnologies.
Diversification Opportunities for Kaufman Broad and Lion Biotechnologies
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaufman and Lion is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and Kaufman Broad 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 Kaufman Broad SA are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Kaufman Broad and Lion Biotechnologies
Assuming the 90 days horizon Kaufman Broad SA is expected to generate 0.51 times more return on investment than Lion Biotechnologies. However, Kaufman Broad SA is 1.95 times less risky than Lion Biotechnologies. It trades about 0.06 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.39 per unit of risk. If you would invest 3,120 in Kaufman Broad SA on September 28, 2024 and sell it today you would earn a total of 50.00 from holding Kaufman Broad SA or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaufman Broad SA vs. Lion Biotechnologies
Performance |
| Timeline |
| Kaufman Broad SA |
| Lion Biotechnologies |
Kaufman Broad and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaufman Broad and Lion Biotechnologies
The main advantage of trading using opposite Kaufman Broad and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| Kaufman Broad vs. SEI INVESTMENTS | Kaufman Broad vs. SOLSTAD OFFSHORE NK | Kaufman Broad vs. WT OFFSHORE | Kaufman Broad vs. HK Electric Investments |
| Lion Biotechnologies vs. Haverty Furniture Companies | Lion Biotechnologies vs. AEON STORES | Lion Biotechnologies vs. INVITATION HOMES DL | Lion Biotechnologies vs. MARKET VECTR RETAIL |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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