Correlation Between KIMBALL ELECTRONICS and Oversea-Chinese BankingLimited

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

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

Diversification Opportunities for KIMBALL ELECTRONICS and Oversea-Chinese BankingLimited

0.76

Correlation Coefficient

KIMBALL ELECTRONICS  Oversea-Chinese BankingLimited

Poor diversification

The 3 months correlation between KIMBALL and Oversea-Chinese is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Oversea Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oversea-Chinese BankingLimited 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 Oversea-Chinese BankingLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oversea-Chinese BankingLimited has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Oversea-Chinese BankingLimited go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and Oversea-Chinese BankingLimited

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 2.13 times more return on investment than Oversea-Chinese BankingLimited. However, KIMBALL ELECTRONICS is 2.13 times more volatile than Oversea Chinese Banking. It trades about 0.09 of its potential returns per unit of risk. Oversea Chinese Banking is currently generating about 0.15 per unit of risk. If you would invest  1,550  in KIMBALL ELECTRONICS on October 11, 2024 and sell it today you would earn a total of  230.00  from holding KIMBALL ELECTRONICS or generate 14.84% return on investment over 90 days.

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

KIMBALL ELECTRONICS  vs.  Oversea Chinese Banking

KIMBALL ELECTRONICS

Risk-Adjusted Performance

7 of 100

Modest

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. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS reported solid returns over the last few months and may actually be approaching a breakup point.

Oversea-Chinese BankingLimited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oversea Chinese Banking are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Oversea-Chinese BankingLimited reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIMBALL ELECTRONICS and Oversea-Chinese BankingLimited

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

The idea behind KIMBALL ELECTRONICS and Oversea Chinese Banking 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.