Correlation Between KBR and Concrete Pumping

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

By analyzing existing cross correlation between KBR Inc and Concrete Pumping Holdings, you can compare the effects of market volatilities on KBR and Concrete Pumping 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 KBR with a short position of Concrete Pumping. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBR and Concrete Pumping.

Diversification Opportunities for KBR and Concrete Pumping

-0.69

Correlation Coefficient

KBR  Concrete Pumping

Excellent diversification

The 3 months correlation between KBR and Concrete is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding KBR Inc and Concrete Pumping Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concrete Pumping Holdings and KBR 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 KBR Inc are associated (or correlated) with Concrete Pumping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concrete Pumping Holdings has no effect on the direction of KBR i.e., KBR and Concrete Pumping go up and down completely randomly.

Pair Corralation between KBR and Concrete Pumping

Considering the 90-day investment horizon KBR Inc is expected to generate 0.65 times more return on investment than Concrete Pumping. However, KBR Inc is 1.55 times less risky than Concrete Pumping. It trades about 0.01 of its potential returns per unit of risk. Concrete Pumping Holdings is currently generating about -0.01 per unit of risk. If you would invest  5,893  in KBR Inc on October 4, 2024 and sell it today you would lose (105.00) from holding KBR Inc or give up 1.78% of portfolio value over 90 days.

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

KBR Inc  vs.  Concrete Pumping Holdings

KBR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Concrete Pumping Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concrete Pumping Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Concrete Pumping reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KBR and Concrete Pumping

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

The idea behind KBR Inc and Concrete Pumping Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.