Correlation Between Big 5 and KE Holdings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Big 5 and KE 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 Big 5 and KE Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and KE Holdings, you can compare the effects of market volatilities on Big 5 and KE 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 Big 5 with a short position of KE Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and KE Holdings.

Diversification Opportunities for Big 5 and KE Holdings

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Big 5 and KE Holdings is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and KE Holdings Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KE Holdings and Big 5 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 Big 5 Sporting are associated (or correlated) with KE Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KE Holdings has no effect on the direction of Big 5 i.e., Big 5 and KE Holdings go up and down completely randomly.

Pair Corralation between Big 5 and KE Holdings

Given the investment horizon of 90 days Big 5 Sporting is expected to under-perform the KE Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Big 5 Sporting is 1.45 times less risky than KE Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The KE Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,683  in KE Holdings on July 7, 2022 and sell it today you would earn a total of  85.00  from holding KE Holdings or generate 5.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Big 5 Sporting  vs.  KE Holdings Inc

 Performance (%) 
       Timeline  
Big 5 Sporting 
Big 5 Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Big 5 Sporting are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Big 5 is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Big 5 Price Channel

KE Holdings 
KE Holdings Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in KE Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, KE Holdings may actually be approaching a critical reversion point that can send shares even higher in November 2022.

KE Holdings Price Channel

Big 5 and KE Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Big 5 and KE Holdings

The main advantage of trading using opposite Big 5 and KE Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, KE 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 KE Holdings will offset losses from the drop in KE Holdings' long position.
Big 5 vs. Best Buy Company
The idea behind Big 5 Sporting and KE Holdings 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.
KE Holdings vs. Amazon Inc
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go