Correlation Between Kaufman Broad and Las Vegas

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

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

Diversification Opportunities for Kaufman Broad and Las Vegas

0.2

Correlation Coefficient

Kaufman Broad  Las Vegas

Modest diversification

The 3 months correlation between Kaufman and Las is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Kaufman Broad 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 Kaufman Broad SA are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Kaufman Broad i.e., Kaufman Broad and Las Vegas go up and down completely randomly.

Pair Corralation between Kaufman Broad and Las Vegas

Assuming the 90 days horizon Kaufman Broad SA is expected to generate 1.05 times more return on investment than Las Vegas. However, Kaufman Broad is 1.05 times more volatile than Las Vegas Sands. It trades about 0.06 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.02 per unit of risk. If you would invest  2,194  in Kaufman Broad SA on September 12, 2024 and sell it today you would earn a total of  961.00  from holding Kaufman Broad SA or generate 43.8% return on investment over 90 days.

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

Kaufman Broad SA  vs.  Las Vegas Sands

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 nearly stable basic indicators, Kaufman Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Las Vegas Sands

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Las Vegas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaufman Broad and Las Vegas

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

The idea behind Kaufman Broad SA and Las Vegas Sands 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.