Correlation Between CoStar and Ke HoldingsInc

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

By analyzing existing cross correlation between CoStar Group and Ke HoldingsInc, you can compare the effects of market volatilities on CoStar and Ke HoldingsInc 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 CoStar with a short position of Ke HoldingsInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoStar and Ke HoldingsInc.

Diversification Opportunities for CoStar and Ke HoldingsInc

0.2

Correlation Coefficient

CoStar  Ke HoldingsInc

Modest diversification

The 3 months correlation between CoStar and BEKE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CoStar Group and Ke HoldingsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ke HoldingsInc and CoStar 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 CoStar Group are associated (or correlated) with Ke HoldingsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ke HoldingsInc has no effect on the direction of CoStar i.e., CoStar and Ke HoldingsInc go up and down completely randomly.

Pair Corralation between CoStar and Ke HoldingsInc

Given the investment horizon of 90 days CoStar Group is expected to generate 0.63 times more return on investment than Ke HoldingsInc. However, CoStar Group is 1.58 times less risky than Ke HoldingsInc. It trades about 0.06 of its potential returns per unit of risk. Ke HoldingsInc is currently generating about -0.01 per unit of risk. If you would invest  7,026  in CoStar Group on January 17, 2024 and sell it today you would earn a total of  1,727  from holding CoStar Group or generate 24.58% return on investment over 90 days.

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

CoStar Group  vs.  Ke HoldingsInc

CoStar Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, CoStar may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Ke HoldingsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ke HoldingsInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Ke HoldingsInc is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CoStar and Ke HoldingsInc

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

The idea behind CoStar Group and Ke HoldingsInc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.