Correlation Between Japan Real and Kaufman Broad

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

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

Diversification Opportunities for Japan Real and Kaufman Broad

0.5

Correlation Coefficient

Japan Real  Kaufman Broad

Very weak diversification

The 3 months correlation between Japan and Kaufman is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Japan Real Estate 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 Japan Real 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 Japan Real Estate 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 Japan Real i.e., Japan Real and Kaufman Broad go up and down completely randomly.

Pair Corralation between Japan Real and Kaufman Broad

Assuming the 90 days horizon Japan Real Estate is expected to generate 0.74 times more return on investment than Kaufman Broad. However, Japan Real Estate is 1.36 times less risky than Kaufman Broad. It trades about 0.09 of its potential returns per unit of risk. Kaufman Broad SA is currently generating about 0.0 per unit of risk. If you would invest  62,590  in Japan Real Estate on December 29, 2024 and sell it today you would earn a total of  4,401  from holding Japan Real Estate or generate 7.03% return on investment over 90 days.

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

Japan Real Estate  vs.  Kaufman Broad SA

Japan Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kaufman Broad SA

Risk-Adjusted Performance

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.

Pair Trading with Japan Real and Kaufman Broad

The main advantage of trading using opposite Japan Real and Kaufman Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Real 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 Japan Real Estate 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.