Correlation Between KB HOME and ECHO INVESTMENT

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

By analyzing existing cross correlation between KB HOME and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on KB HOME and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB HOME and ECHO INVESTMENT.

Diversification Opportunities for KB HOME and ECHO INVESTMENT

0.68

Correlation Coefficient

KB HOME  ECHO INVESTMENT

Poor diversification

The 3 months correlation between KBH and ECHO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KB HOME and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of KB HOME i.e., KB HOME and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between KB HOME and ECHO INVESTMENT

Assuming the 90 days trading horizon KB HOME is expected to generate 1.06 times less return on investment than ECHO INVESTMENT. In addition to that, KB HOME is 1.45 times more volatile than ECHO INVESTMENT ZY. It trades about 0.08 of its total potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.12 per unit of volatility. If you would invest  108.00  in ECHO INVESTMENT ZY on May 21, 2025 and sell it today you would earn a total of  15.00  from holding ECHO INVESTMENT ZY or generate 13.89% return on investment over 90 days.

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

KB HOME  vs.  ECHO INVESTMENT ZY

KB HOME

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in KB HOME are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, KB HOME unveiled solid returns over the last few months and may actually be approaching a breakup point.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ECHO INVESTMENT reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB HOME and ECHO INVESTMENT

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

The idea behind KB HOME and ECHO INVESTMENT ZY 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.