Correlation Between LION ONE and Kaufman Broad

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

By analyzing existing cross correlation between LION ONE METALS and Kaufman Broad SA, you can compare the effects of market volatilities on LION ONE and Kaufman Broad 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 LION ONE with a short position of Kaufman Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Kaufman Broad.

Diversification Opportunities for LION ONE and Kaufman Broad

0.73

Correlation Coefficient

LION ONE  Kaufman Broad

Poor diversification

The 3 months correlation between LION and Kaufman is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Kaufman Broad SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Broad SA and LION ONE 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 LION ONE METALS are associated (or correlated) with Kaufman Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Broad SA has no effect on the direction of LION ONE i.e., LION ONE and Kaufman Broad go up and down completely randomly.

Pair Corralation between LION ONE and Kaufman Broad

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Kaufman Broad. In addition to that, LION ONE is 4.12 times more volatile than Kaufman Broad SA. It trades about -0.01 of its total potential returns per unit of risk. Kaufman Broad SA is currently generating about -0.03 per unit of volatility. If you would invest  3,205  in Kaufman Broad SA on September 22, 2024 and sell it today you would lose (35.00) from holding Kaufman Broad SA or give up 1.09% of portfolio value over 90 days.

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

LION ONE METALS  vs.  Kaufman Broad SA

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LION ONE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kaufman Broad SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kaufman Broad is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LION ONE and Kaufman Broad

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

The idea behind LION ONE METALS and Kaufman Broad SA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.