Correlation Between KIMBALL ELECTRONICS and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and Guangdong 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 KIMBALL ELECTRONICS and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and Guangdong Investment Limited, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and Guangdong 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 KIMBALL ELECTRONICS with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Guangdong Investment.
Diversification Opportunities for KIMBALL ELECTRONICS and Guangdong Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KIMBALL and Guangdong is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Guangdong Investment go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and Guangdong Investment
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 2.96 times less risky than Guangdong Investment. The stock trades about 0.0 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Guangdong Investment Limited on October 11, 2024 and sell it today you would earn a total of 56.00 from holding Guangdong Investment Limited or generate 350.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. Guangdong Investment Limited
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| Guangdong Investment |
KIMBALL ELECTRONICS and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and Guangdong Investment
The main advantage of trading using opposite KIMBALL ELECTRONICS and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS position performs unexpectedly, Guangdong 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| KIMBALL ELECTRONICS vs. Global Ship Lease | KIMBALL ELECTRONICS vs. VIVA WINE GROUP | KIMBALL ELECTRONICS vs. Taiwan Semiconductor Manufacturing | KIMBALL ELECTRONICS vs. Treasury Wine Estates |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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