Correlation Between KIMBALL ELECTRONICS and POSCO Holdings

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

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

Diversification Opportunities for KIMBALL ELECTRONICS and POSCO Holdings

-0.38

Correlation Coefficient

KIMBALL ELECTRONICS  POSCO Holdings

Very good diversification

The 3 months correlation between KIMBALL and POSCO is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings 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 POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and POSCO Holdings go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and POSCO Holdings

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the POSCO Holdings. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.33 times less risky than POSCO Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The POSCO Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,240  in POSCO Holdings on December 20, 2024 and sell it today you would earn a total of  480.00  from holding POSCO Holdings or generate 11.32% return on investment over 90 days.

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

KIMBALL ELECTRONICS  vs.  POSCO Holdings

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.

POSCO Holdings

Risk-Adjusted Performance

Modest

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

Pair Trading with KIMBALL ELECTRONICS and POSCO Holdings

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

The idea behind KIMBALL ELECTRONICS and POSCO Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.