Correlation Between KIMBALL ELECTRONICS and Perdoceo Education

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

By analyzing existing cross correlation between KIMBALL ELECTRONICS and Perdoceo Education, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and Perdoceo Education 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 Perdoceo Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Perdoceo Education.

Diversification Opportunities for KIMBALL ELECTRONICS and Perdoceo Education

0.79

Correlation Coefficient

KIMBALL ELECTRONICS  Perdoceo Education

Poor diversification

The 3 months correlation between KIMBALL and Perdoceo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Perdoceo Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdoceo Education 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 Perdoceo Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdoceo Education has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Perdoceo Education go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and Perdoceo Education

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Perdoceo Education. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.02 times less risky than Perdoceo Education. The stock trades about -0.18 of its potential returns per unit of risk. The Perdoceo Education is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,527  in Perdoceo Education on September 23, 2024 and sell it today you would earn a total of  13.00  from holding Perdoceo Education or generate 0.51% return on investment over 90 days.

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

KIMBALL ELECTRONICS  vs.  Perdoceo Education

KIMBALL ELECTRONICS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Perdoceo Education

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perdoceo Education are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perdoceo Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIMBALL ELECTRONICS and Perdoceo Education

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

The idea behind KIMBALL ELECTRONICS and Perdoceo Education 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.