Correlation Between STMICROELECTRONICS and KIMBALL ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and KIMBALL ELECTRONICS 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 STMICROELECTRONICS and KIMBALL ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on STMICROELECTRONICS and KIMBALL ELECTRONICS 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 STMICROELECTRONICS with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and KIMBALL ELECTRONICS.
Diversification Opportunities for STMICROELECTRONICS and KIMBALL ELECTRONICS
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMICROELECTRONICS and KIMBALL is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and STMICROELECTRONICS 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 STMICROELECTRONICS are associated (or correlated) with KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and KIMBALL ELECTRONICS go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and KIMBALL ELECTRONICS
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the KIMBALL ELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 1.08 times less risky than KIMBALL ELECTRONICS. The stock trades about -0.02 of its potential returns per unit of risk. The KIMBALL ELECTRONICS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,080 in KIMBALL ELECTRONICS on September 23, 2024 and sell it today you would lose (350.00) from holding KIMBALL ELECTRONICS or give up 16.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. KIMBALL ELECTRONICS
Performance |
| Timeline |
| STMICROELECTRONICS |
| KIMBALL ELECTRONICS |
STMICROELECTRONICS and KIMBALL ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and KIMBALL ELECTRONICS
The main advantage of trading using opposite STMICROELECTRONICS and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS will offset losses from the drop in KIMBALL ELECTRONICS's long position.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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