Correlation Between Aedas Homes and KIMBALL ELECTRONICS

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

By analyzing existing cross correlation between Aedas Homes SA and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on Aedas Homes 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 Aedas Homes with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and KIMBALL ELECTRONICS.

Diversification Opportunities for Aedas Homes and KIMBALL ELECTRONICS

-0.23

Correlation Coefficient

Aedas Homes  KIMBALL ELECTRONICS

Very good diversification

The 3 months correlation between Aedas and KIMBALL is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and Aedas Homes 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 Aedas Homes SA 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 Aedas Homes i.e., Aedas Homes and KIMBALL ELECTRONICS go up and down completely randomly.

Pair Corralation between Aedas Homes and KIMBALL ELECTRONICS

Assuming the 90 days horizon Aedas Homes is expected to generate 4.97 times less return on investment than KIMBALL ELECTRONICS. But when comparing it to its historical volatility, Aedas Homes SA is 1.52 times less risky than KIMBALL ELECTRONICS. It trades about 0.03 of its potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,620  in KIMBALL ELECTRONICS on October 24, 2024 and sell it today you would earn a total of  210.00  from holding KIMBALL ELECTRONICS or generate 12.96% return on investment over 90 days.

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

Aedas Homes SA  vs.  KIMBALL ELECTRONICS

Aedas Homes SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aedas Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KIMBALL ELECTRONICS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KIMBALL ELECTRONICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aedas Homes and KIMBALL ELECTRONICS

The main advantage of trading using opposite Aedas Homes and KIMBALL ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes 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.

The idea behind Aedas Homes SA and KIMBALL ELECTRONICS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.