Correlation Between Kaufman Broad and Suzano SA

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

Diversification Opportunities for Kaufman Broad and Suzano SA

-0.23

Correlation Coefficient

Kaufman Broad  Suzano SA

Very good diversification

The 3 months correlation between Kaufman and Suzano is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA 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 Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and Suzano SA go up and down completely randomly.

Pair Corralation between Kaufman Broad and Suzano SA

Assuming the 90 days horizon Kaufman Broad SA is expected to under-perform the Suzano SA. But the stock apears to be less risky and, when comparing its historical volatility, Kaufman Broad SA is 1.3 times less risky than Suzano SA. The stock trades about -0.14 of its potential returns per unit of risk. The Suzano SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  952.00  in Suzano SA on September 17, 2024 and sell it today you would earn a total of  23.00  from holding Suzano SA or generate 2.42% return on investment over 90 days.

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

Kaufman Broad SA  vs.  Suzano SA

Kaufman Broad SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaufman Broad SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Suzano SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzano SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Suzano SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaufman Broad and Suzano SA

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

The idea behind Kaufman Broad SA and Suzano SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.