Correlation Between Kaufman Broad and Air Transport

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

Diversification Opportunities for Kaufman Broad and Air Transport

0.56

Correlation Coefficient

Kaufman Broad  Air Transport

Very weak diversification

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

Pair Corralation between Kaufman Broad and Air Transport

Assuming the 90 days horizon Kaufman Broad is expected to generate 2.01 times less return on investment than Air Transport. In addition to that, Kaufman Broad is 2.71 times more volatile than Air Transport Services. It trades about 0.01 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.08 per unit of volatility. If you would invest  2,100  in Air Transport Services on December 3, 2024 and sell it today you would earn a total of  40.00  from holding Air Transport Services or generate 1.9% 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.  Air Transport Services

Kaufman Broad SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kaufman Broad may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Air Transport Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaufman Broad and Air Transport

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

The idea behind Kaufman Broad SA and Air Transport Services 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.