Correlation Between Kaufman Broad and BII Railway
Can any of the company-specific risk be diversified away by investing in both Kaufman Broad and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Kaufman Broad and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Broad and BII Railway.
Diversification Opportunities for Kaufman Broad and BII Railway
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaufman and BII is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and BII Railway go up and down completely randomly.
Pair Corralation between Kaufman Broad and BII Railway
Assuming the 90 days horizon Kaufman Broad SA is expected to under-perform the BII Railway. But the stock apears to be less risky and, when comparing its historical volatility, Kaufman Broad SA is 1.14 times less risky than BII Railway. The stock trades about -0.21 of its potential returns per unit of risk. The BII Railway Transportation is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2.65 in BII Railway Transportation on September 13, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kaufman Broad SA vs. BII Railway Transportation
Performance |
| Timeline |
| Kaufman Broad SA |
| BII Railway Transpor |
Kaufman Broad and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaufman Broad and BII Railway
The main advantage of trading using opposite Kaufman Broad and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Kaufman Broad vs. Lennar | Kaufman Broad vs. Sekisui Chemical Co | Kaufman Broad vs. Superior Plus Corp | Kaufman Broad vs. SIVERS SEMICONDUCTORS AB |
| BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway vs. Norsk Hydro ASA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |