Correlation Between KIMBALL ELECTRONICS and Sunny Optical

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

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

Diversification Opportunities for KIMBALL ELECTRONICS and Sunny Optical

0.58

Correlation Coefficient

KIMBALL ELECTRONICS  Sunny Optical

Very weak diversification

The 3 months correlation between KIMBALL and Sunny is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Sunny Optical go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and Sunny Optical

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.55 times less risky than Sunny Optical. The stock trades about -0.02 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  680.00  in Sunny Optical Technology on September 20, 2024 and sell it today you would earn a total of  130.00  from holding Sunny Optical Technology or generate 19.12% return on investment over 90 days.

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

KIMBALL ELECTRONICS  vs.  Sunny Optical Technology

KIMBALL ELECTRONICS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sunny Optical Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIMBALL ELECTRONICS and Sunny Optical

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

The idea behind KIMBALL ELECTRONICS and Sunny Optical Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.