Correlation Between KB Home and Zimplats Holdings

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

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

Diversification Opportunities for KB Home and Zimplats Holdings

-0.71

Correlation Coefficient

KB Home  Zimplats Holdings

Pay attention - limited upside

The 3 months correlation between KBH and Zimplats is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding KB Home and Zimplats Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimplats Holdings and KB Home 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 KB Home are associated (or correlated) with Zimplats Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimplats Holdings has no effect on the direction of KB Home i.e., KB Home and Zimplats Holdings go up and down completely randomly.

Pair Corralation between KB Home and Zimplats Holdings

If you would invest  1,055  in Zimplats Holdings Limited on January 29, 2024 and sell it today you would earn a total of  0.00  from holding Zimplats Holdings Limited or generate 0.0% return on investment over 90 days.

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

KB Home  vs.  Zimplats Holdings Limited

KB Home

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KB Home are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental drivers, KB Home may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Zimplats Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zimplats Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KB Home and Zimplats Holdings

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

The idea behind KB Home and Zimplats Holdings Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.