Correlation Between Platinum Investment and KB HOME

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

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

Diversification Opportunities for Platinum Investment and KB HOME

0.25

Correlation Coefficient

Platinum Investment  KB HOME

Modest diversification

The 3 months correlation between Platinum and KBH is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME and Platinum Investment 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 Platinum Investment Management 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 Platinum Investment i.e., Platinum Investment and KB HOME go up and down completely randomly.

Pair Corralation between Platinum Investment and KB HOME

Assuming the 90 days horizon Platinum Investment Management is expected to generate 1.89 times more return on investment than KB HOME. However, Platinum Investment is 1.89 times more volatile than KB HOME. It trades about -0.04 of its potential returns per unit of risk. KB HOME is currently generating about -0.15 per unit of risk. If you would invest  44.00  in Platinum Investment Management on September 28, 2024 and sell it today you would lose (5.00) from holding Platinum Investment Management or give up 11.36% of portfolio value over 90 days.

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

Platinum Investment Management  vs.  KB HOME

Platinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Platinum Investment and KB HOME

The main advantage of trading using opposite Platinum Investment and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Investment 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 Platinum Investment Management 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.