Correlation Between Vinci SA and KBR

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

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

Diversification Opportunities for Vinci SA and KBR

-0.8

Correlation Coefficient

Vinci SA  KBR

Pay attention - limited upside

The 3 months correlation between Vinci and KBR is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA ADR and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc and Vinci SA 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 Vinci SA ADR are associated (or correlated) with KBR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBR Inc has no effect on the direction of Vinci SA i.e., Vinci SA and KBR go up and down completely randomly.

Pair Corralation between Vinci SA and KBR

Assuming the 90 days horizon Vinci SA ADR is expected to generate 0.85 times more return on investment than KBR. However, Vinci SA ADR is 1.18 times less risky than KBR. It trades about 0.22 of its potential returns per unit of risk. KBR Inc is currently generating about -0.25 per unit of risk. If you would invest  2,548  in Vinci SA ADR on December 2, 2024 and sell it today you would earn a total of  315.00  from holding Vinci SA ADR or generate 12.36% return on investment over 90 days.

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

Vinci SA ADR  vs.  KBR Inc

Vinci SA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vinci SA ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vinci SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KBR Inc

Risk-Adjusted Performance

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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vinci SA and KBR

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

The idea behind Vinci SA ADR and KBR Inc 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.