Correlation Between PKSHA TECHNOLOGY and Kaufman Broad

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

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

Diversification Opportunities for PKSHA TECHNOLOGY and Kaufman Broad

-0.56

Correlation Coefficient

PKSHA TECHNOLOGY  Kaufman Broad

Excellent diversification

The 3 months correlation between PKSHA and Kaufman is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and Kaufman Broad go up and down completely randomly.

Pair Corralation between PKSHA TECHNOLOGY and Kaufman Broad

Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to generate 1.79 times more return on investment than Kaufman Broad. However, PKSHA TECHNOLOGY is 1.79 times more volatile than Kaufman Broad SA. It trades about 0.06 of its potential returns per unit of risk. Kaufman Broad SA is currently generating about 0.03 per unit of risk. If you would invest  2,100  in PKSHA TECHNOLOGY INC on September 26, 2024 and sell it today you would earn a total of  180.00  from holding PKSHA TECHNOLOGY INC or generate 8.57% return on investment over 90 days.

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

PKSHA TECHNOLOGY INC  vs.  Kaufman Broad SA

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PKSHA TECHNOLOGY and Kaufman Broad

The main advantage of trading using opposite PKSHA TECHNOLOGY and Kaufman Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.