Correlation Between Ur Energy and KB HOME

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

By analyzing existing cross correlation between Ur Energy and KB HOME, you can compare the effects of market volatilities on Ur Energy and KB HOME 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 Ur Energy with a short position of KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ur Energy and KB HOME.

Diversification Opportunities for Ur Energy and KB HOME

0.31

Correlation Coefficient

Ur Energy  KB HOME

Weak diversification

The 3 months correlation between U9T and KBH is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ur Energy and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and Ur Energy 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 Ur Energy are associated (or correlated) with KB HOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB HOME has no effect on the direction of Ur Energy i.e., Ur Energy and KB HOME go up and down completely randomly.

Pair Corralation between Ur Energy and KB HOME

Assuming the 90 days horizon Ur Energy is expected to generate 3.42 times less return on investment than KB HOME. In addition to that, Ur Energy is 1.64 times more volatile than KB HOME. It trades about 0.01 of its total potential returns per unit of risk. KB HOME is currently generating about 0.08 per unit of volatility. If you would invest  3,053  in KB HOME on October 3, 2024 and sell it today you would earn a total of  3,147  from holding KB HOME or generate 103.08% return on investment over 90 days.

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

Ur Energy  vs.  KB HOME

Ur Energy

Risk-Adjusted Performance

1 of 100

Weak

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

KB HOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB HOME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ur Energy and KB HOME

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

The idea behind Ur Energy and KB HOME 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.