Correlation Between Kimball Electronics and Cps Technologies

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

By analyzing existing cross correlation between Kimball Electronics and Cps Technologies, you can compare the effects of market volatilities on Kimball Electronics and Cps Technologies 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 Cps Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Cps Technologies.

Diversification Opportunities for Kimball Electronics and Cps Technologies

0.34

Correlation Coefficient

Kimball Electronics  Cps Technologies

Weak diversification

The 3 months correlation between Kimball and Cps is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Cps Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cps Technologies 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 Cps Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cps Technologies has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Cps Technologies go up and down completely randomly.

Pair Corralation between Kimball Electronics and Cps Technologies

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.68 times more return on investment than Cps Technologies. However, Kimball Electronics is 1.68 times more volatile than Cps Technologies. It trades about 0.12 of its potential returns per unit of risk. Cps Technologies is currently generating about -0.08 per unit of risk. If you would invest  1,847  in Kimball Electronics on September 4, 2024 and sell it today you would earn a total of  127.00  from holding Kimball Electronics or generate 6.88% 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.  Cps Technologies

Kimball Electronics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Kimball Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cps Technologies

Risk-Adjusted Performance

4 of 100

Modest

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

Pair Trading with Kimball Electronics and Cps Technologies

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

The idea behind Kimball Electronics and Cps Technologies 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 Stocks Directory module to find actively traded stocks across global markets.