Correlation Between KB HOME and PACIFIC ONLINE

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

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

Diversification Opportunities for KB HOME and PACIFIC ONLINE

0.0

Correlation Coefficient

KB HOME  PACIFIC ONLINE

Pay attention - limited upside

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

Pair Corralation between KB HOME and PACIFIC ONLINE

If you would invest  7,375  in KB HOME on September 12, 2024 and sell it today you would earn a total of  75.00  from holding KB HOME or generate 1.02% return on investment over 90 days.

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

KB HOME  vs.  PACIFIC ONLINE

KB HOME

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB HOME are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, KB HOME is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PACIFIC ONLINE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KB HOME and PACIFIC ONLINE

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

The idea behind KB HOME and PACIFIC ONLINE 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.