Correlation Between CCC SA and KB HOME

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

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

Diversification Opportunities for CCC SA and KB HOME

0.06

Correlation Coefficient

CCC SA  KB HOME

Significant diversification

The 3 months correlation between CCC and KBH is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CCC SA and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and CCC 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 CCC SA 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 CCC SA i.e., CCC SA and KB HOME go up and down completely randomly.

Pair Corralation between CCC SA and KB HOME

Assuming the 90 days horizon CCC SA is expected to generate 1.37 times more return on investment than KB HOME. However, CCC SA is 1.37 times more volatile than KB HOME. It trades about 0.13 of its potential returns per unit of risk. KB HOME is currently generating about -0.08 per unit of risk. If you would invest  3,500  in CCC SA on September 16, 2024 and sell it today you would earn a total of  926.00  from holding CCC SA or generate 26.46% return on investment over 90 days.

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

CCC SA  vs.  KB HOME

CCC SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CCC SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CCC SA reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CCC SA and KB HOME

The main advantage of trading using opposite CCC SA and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCC SA 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 CCC SA 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.