Correlation Between Kaufman Broad and Poste Italiane

Can any of the company-specific risk be diversified away by investing in both Kaufman Broad and Poste Italiane 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 Poste Italiane 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 Poste Italiane SpA, you can compare the effects of market volatilities on Kaufman Broad and Poste Italiane 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 Poste Italiane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Broad and Poste Italiane.

Diversification Opportunities for Kaufman Broad and Poste Italiane

-0.48

Correlation Coefficient

Kaufman Broad  Poste Italiane

Very good diversification

The 3 months correlation between Kaufman and Poste is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA 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 Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and Poste Italiane go up and down completely randomly.

Pair Corralation between Kaufman Broad and Poste Italiane

If you would invest  2,786  in Kaufman Broad SA on September 24, 2024 and sell it today you would earn a total of  414.00  from holding Kaufman Broad SA or generate 14.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.59%
Values	Daily Returns

Kaufman Broad SA  vs.  Poste Italiane SpA

Kaufman Broad SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kaufman Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Poste Italiane SpA

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Poste Italiane SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Poste Italiane may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kaufman Broad and Poste Italiane

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

The idea behind Kaufman Broad SA and Poste Italiane SpA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.