Correlation Between KB Home and Desarrolladora Homex

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

By analyzing existing cross correlation between KB Home and Desarrolladora Homex SAB, you can compare the effects of market volatilities on KB Home and Desarrolladora Homex 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 Desarrolladora Homex. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Home and Desarrolladora Homex.

Diversification Opportunities for KB Home and Desarrolladora Homex

0.0

Correlation Coefficient

KB Home  Desarrolladora Homex

Pay attention - limited upside

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

Pair Corralation between KB Home and Desarrolladora Homex

If you would invest  0.10  in Desarrolladora Homex SAB on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Desarrolladora Homex SAB or generate 0.0% return on investment over 90 days.

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

KB Home  vs.  Desarrolladora Homex SAB

KB Home

Risk-Adjusted Performance

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 fairly strong technical indicators, KB Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Desarrolladora Homex SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Desarrolladora Homex SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Desarrolladora Homex is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KB Home and Desarrolladora Homex

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

The idea behind KB Home and Desarrolladora Homex SAB 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.