Correlation Between SPORT LISBOA and Kaufman Broad

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

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

Diversification Opportunities for SPORT LISBOA and Kaufman Broad

-0.04

Correlation Coefficient

SPORT LISBOA  Kaufman Broad

Good diversification

The 3 months correlation between SPORT and Kaufman is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E 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 SPORT LISBOA 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 SPORT LISBOA E 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 SPORT LISBOA i.e., SPORT LISBOA and Kaufman Broad go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Kaufman Broad

Assuming the 90 days horizon SPORT LISBOA E is expected to under-perform the Kaufman Broad. In addition to that, SPORT LISBOA is 1.92 times more volatile than Kaufman Broad SA. It trades about -0.02 of its total potential returns per unit of risk. Kaufman Broad SA is currently generating about 0.25 per unit of volatility. If you would invest  3,070  in Kaufman Broad SA on October 15, 2024 and sell it today you would earn a total of  175.00  from holding Kaufman Broad SA or generate 5.7% return on investment over 90 days.

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

SPORT LISBOA E  vs.  Kaufman Broad SA

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kaufman Broad SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaufman Broad SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SPORT LISBOA and Kaufman Broad

The main advantage of trading using opposite SPORT LISBOA and Kaufman Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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 SPORT LISBOA E 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.