Correlation Between KIMBALL ELECTRONICS and ZIM Integrated

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

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

Diversification Opportunities for KIMBALL ELECTRONICS and ZIM Integrated

-0.06

Correlation Coefficient

KIMBALL ELECTRONICS  ZIM Integrated

Good diversification

The 3 months correlation between KIMBALL and ZIM is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and ZIM Integrated go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and ZIM Integrated

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the ZIM Integrated. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 2.24 times less risky than ZIM Integrated. The stock trades about -0.08 of its potential returns per unit of risk. The ZIM Integrated Shipping is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,764  in ZIM Integrated Shipping on December 20, 2024 and sell it today you would lose (42.00) from holding ZIM Integrated Shipping or give up 2.38% of portfolio value over 90 days.

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

KIMBALL ELECTRONICS  vs.  ZIM Integrated Shipping

KIMBALL ELECTRONICS

Risk-Adjusted Performance

Very Weak

Over the last 90 days KIMBALL ELECTRONICS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ZIM Integrated Shipping

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ZIM Integrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KIMBALL ELECTRONICS and ZIM Integrated

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

The idea behind KIMBALL ELECTRONICS and ZIM Integrated Shipping 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.