Correlation Between Kaufman Broad and International Consolidated

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

Diversification Opportunities for Kaufman Broad and International Consolidated

-0.5

Correlation Coefficient

Kaufman Broad  International Consolidated

Very good diversification

The 3 months correlation between Kaufman and International is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and International Consolidated go up and down completely randomly.

Pair Corralation between Kaufman Broad and International Consolidated

Assuming the 90 days horizon Kaufman Broad SA is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Kaufman Broad SA is 1.36 times less risky than International Consolidated. The stock trades about -0.15 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  284.00  in International Consolidated Airlines on September 15, 2024 and sell it today you would earn a total of  69.00  from holding International Consolidated Airlines or generate 24.3% return on investment over 90 days.

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

Kaufman Broad SA  vs.  International Consolidated Air

Kaufman Broad SA

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 1 (%) 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.

International Consolidated

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaufman Broad and International Consolidated

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

The idea behind Kaufman Broad SA and International Consolidated Airlines 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.