Correlation Between Kimball Electronics and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Deswell Industries 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 Deswell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Deswell Industries, you can compare the effects of market volatilities on Kimball Electronics and Deswell Industries 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 Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Deswell Industries.
Diversification Opportunities for Kimball Electronics and Deswell Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kimball and Deswell is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries 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 Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Deswell Industries go up and down completely randomly.
Pair Corralation between Kimball Electronics and Deswell Industries
Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.69 times less return on investment than Deswell Industries. In addition to that, Kimball Electronics is 1.06 times more volatile than Deswell Industries. It trades about 0.08 of its total potential returns per unit of risk. Deswell Industries is currently generating about 0.15 per unit of volatility. If you would invest 228.00 in Deswell Industries on September 3, 2024 and sell it today you would earn a total of 44.00 from holding Deswell Industries or generate 19.3% 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. Deswell Industries
Performance |
| Timeline |
| Kimball Electronics |
| Deswell Industries |
Kimball Electronics and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Deswell Industries
The main advantage of trading using opposite Kimball Electronics and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics | Kimball Electronics vs. Advanced Energy Industries |
| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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