Correlation Between Kimball Electronics and Infinera

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

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

Diversification Opportunities for Kimball Electronics and Infinera

-0.49

Correlation Coefficient

Kimball Electronics  Infinera

Very good diversification

The 3 months correlation between Kimball and Infinera is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Infinera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinera 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 Infinera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinera has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Infinera go up and down completely randomly.

Pair Corralation between Kimball Electronics and Infinera

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Infinera. In addition to that, Kimball Electronics is 6.33 times more volatile than Infinera. It trades about -0.12 of its total potential returns per unit of risk. Infinera is currently generating about 0.0 per unit of volatility. If you would invest  662.00  in Infinera on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Infinera or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kimball Electronics  vs.  Infinera

Kimball Electronics

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kimball Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Infinera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infinera has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Infinera is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kimball Electronics and Infinera

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

The idea behind Kimball Electronics and Infinera 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.