Correlation Between KB Home and Internacional

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

By analyzing existing cross correlation between KB Home and Internacional de Cermica, you can compare the effects of market volatilities on KB Home and Internacional 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 KB Home with a short position of Internacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Internacional.

Diversification Opportunities for KB Home and Internacional

0.0

Correlation Coefficient

KB Home  Internacional

Pay attention - limited upside

The 3 months correlation between KBH and Internacional is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Internacional de Cermica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internacional de Cermica and KB Home 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 KB Home are associated (or correlated) with Internacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internacional de Cermica has no effect on the direction of KB Home i.e., KB Home and Internacional go up and down completely randomly.

Pair Corralation between KB Home and Internacional

If you would invest  133,700  in KB Home on October 27, 2024 and sell it today you would earn a total of  2,300  from holding KB Home or generate 1.72% return on investment over 90 days.

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

KB Home  vs.  Internacional de Cermica

KB Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Internacional de Cermica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Internacional de Cermica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Internacional is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KB Home and Internacional

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

The idea behind KB Home and Internacional de Cermica 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.