Correlation Between GAMING FAC and Kaufman Broad

Can any of the company-specific risk be diversified away by investing in both GAMING FAC and Kaufman Broad 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 GAMING FAC and Kaufman Broad into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GAMING FAC SA and Kaufman Broad SA, you can compare the effects of market volatilities on GAMING FAC and Kaufman Broad 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 GAMING FAC with a short position of Kaufman Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and Kaufman Broad.

Diversification Opportunities for GAMING FAC and Kaufman Broad

0.32

Correlation Coefficient

GAMING FAC  Kaufman Broad

Weak diversification

The 3 months correlation between GAMING and Kaufman is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and Kaufman Broad SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Broad SA and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with Kaufman Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Broad SA has no effect on the direction of GAMING FAC i.e., GAMING FAC and Kaufman Broad go up and down completely randomly.

Pair Corralation between GAMING FAC and Kaufman Broad

Assuming the 90 days horizon GAMING FAC SA is expected to generate 1.68 times more return on investment than Kaufman Broad. However, GAMING FAC is 1.68 times more volatile than Kaufman Broad SA. It trades about 0.01 of its potential returns per unit of risk. Kaufman Broad SA is currently generating about -0.03 per unit of risk. If you would invest  162.00  in GAMING FAC SA on September 22, 2024 and sell it today you would earn a total of  0.00  from holding GAMING FAC SA or generate 0.0% return on investment over 90 days.

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

GAMING FAC SA  vs.  Kaufman Broad SA

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GAMING FAC and Kaufman Broad

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

The idea behind GAMING FAC SA and Kaufman Broad 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.