Correlation Between SOLSTAD OFFSHORE and Kaufman Broad

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

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

Diversification Opportunities for SOLSTAD OFFSHORE and Kaufman Broad

-0.74

Correlation Coefficient

SOLSTAD OFFSHORE  Kaufman Broad

Pay attention - limited upside

The 3 months correlation between SOLSTAD and Kaufman is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Kaufman Broad go up and down completely randomly.

Pair Corralation between SOLSTAD OFFSHORE and Kaufman Broad

Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to under-perform the Kaufman Broad. In addition to that, SOLSTAD OFFSHORE is 1.74 times more volatile than Kaufman Broad SA. It trades about 0.0 of its total potential returns per unit of risk. Kaufman Broad SA is currently generating about 0.08 per unit of volatility. If you would invest  2,670  in Kaufman Broad SA on September 29, 2024 and sell it today you would earn a total of  500.00  from holding Kaufman Broad SA or generate 18.73% return on investment over 90 days.

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

SOLSTAD OFFSHORE NK  vs.  Kaufman Broad SA

SOLSTAD OFFSHORE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOLSTAD OFFSHORE NK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOLSTAD OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Kaufman Broad SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 2 (%) 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 SOLSTAD OFFSHORE and Kaufman Broad

The main advantage of trading using opposite SOLSTAD OFFSHORE and Kaufman Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.