Correlation Between KB Home and SUPER HI

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

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

Diversification Opportunities for KB Home and SUPER HI

-0.06

Correlation Coefficient

KB Home  SUPER HI

Good diversification

The 3 months correlation between KBH and SUPER is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and SUPER HI INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUPER HI INTERNATIONAL 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 SUPER HI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUPER HI INTERNATIONAL has no effect on the direction of KB Home i.e., KB Home and SUPER HI go up and down completely randomly.

Pair Corralation between KB Home and SUPER HI

Considering the 90-day investment horizon KB Home is expected to under-perform the SUPER HI. But the stock apears to be less risky and, when comparing its historical volatility, KB Home is 1.89 times less risky than SUPER HI. The stock trades about -0.08 of its potential returns per unit of risk. The SUPER HI INTERNATIONAL is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,728  in SUPER HI INTERNATIONAL on December 18, 2024 and sell it today you would lose (238.00) from holding SUPER HI INTERNATIONAL or give up 8.72% of portfolio value over 90 days.

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

KB Home  vs.  SUPER HI INTERNATIONAL

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. Despite latest inconsistent performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SUPER HI INTERNATIONAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUPER HI INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, SUPER HI is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with KB Home and SUPER HI

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

The idea behind KB Home and SUPER HI INTERNATIONAL 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.