Correlation Between KIMBALL ELECTRONICS and Otis Worldwide

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

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

Diversification Opportunities for KIMBALL ELECTRONICS and Otis Worldwide

0.13

Correlation Coefficient

KIMBALL ELECTRONICS  Otis Worldwide

Average diversification

The 3 months correlation between KIMBALL and Otis is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Otis Worldwide Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otis Worldwide Corp 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 Otis Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otis Worldwide Corp has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Otis Worldwide go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and Otis Worldwide

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Otis Worldwide. In addition to that, KIMBALL ELECTRONICS is 1.83 times more volatile than Otis Worldwide Corp. It trades about -0.08 of its total potential returns per unit of risk. Otis Worldwide Corp is currently generating about 0.04 per unit of volatility. If you would invest  9,227  in Otis Worldwide Corp on November 29, 2024 and sell it today you would earn a total of  77.00  from holding Otis Worldwide Corp or generate 0.83% return on investment over 90 days.

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

KIMBALL ELECTRONICS  vs.  Otis Worldwide Corp

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 nearly stable basic indicators, KIMBALL ELECTRONICS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Otis Worldwide Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Otis Worldwide Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Otis Worldwide 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 Otis Worldwide

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

The idea behind KIMBALL ELECTRONICS and Otis Worldwide Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.