Correlation Between KAUFMAN ET and TOTAL GABON

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

By analyzing existing cross correlation between KAUFMAN ET BROAD and TOTAL GABON, you can compare the effects of market volatilities on KAUFMAN ET and TOTAL GABON 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 ET with a short position of TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and TOTAL GABON.

Diversification Opportunities for KAUFMAN ET and TOTAL GABON

-0.37

Correlation Coefficient

KAUFMAN ET  TOTAL GABON

Very good diversification

The 3 months correlation between KAUFMAN and TOTAL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON and KAUFMAN ET 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 ET BROAD are associated (or correlated) with TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and TOTAL GABON go up and down completely randomly.

Pair Corralation between KAUFMAN ET and TOTAL GABON

Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to under-perform the TOTAL GABON. But the stock apears to be less risky and, when comparing its historical volatility, KAUFMAN ET BROAD is 1.38 times less risky than TOTAL GABON. The stock trades about -0.01 of its potential returns per unit of risk. The TOTAL GABON is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15,900  in TOTAL GABON on September 5, 2024 and sell it today you would earn a total of  2,750  from holding TOTAL GABON or generate 17.3% return on investment over 90 days.

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

KAUFMAN ET BROAD  vs.  TOTAL GABON

KAUFMAN ET BROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KAUFMAN ET BROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TOTAL GABON

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL GABON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TOTAL GABON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KAUFMAN ET and TOTAL GABON

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

The idea behind KAUFMAN ET BROAD and TOTAL GABON 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.