Correlation Between HYDROFARM HLD and KIMBALL ELECTRONICS

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

By analyzing existing cross correlation between HYDROFARM HLD GRP and KIMBALL ELECTRONICS, you can compare the effects of market volatilities on HYDROFARM HLD and KIMBALL ELECTRONICS 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 HYDROFARM HLD with a short position of KIMBALL ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and KIMBALL ELECTRONICS.

Diversification Opportunities for HYDROFARM HLD and KIMBALL ELECTRONICS

0.12

Correlation Coefficient

HYDROFARM HLD  KIMBALL ELECTRONICS

Average diversification

The 3 months correlation between HYDROFARM and KIMBALL is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and KIMBALL ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBALL ELECTRONICS and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with KIMBALL ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBALL ELECTRONICS has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and KIMBALL ELECTRONICS go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and KIMBALL ELECTRONICS

Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the KIMBALL ELECTRONICS. In addition to that, HYDROFARM HLD is 2.43 times more volatile than KIMBALL ELECTRONICS. It trades about -0.01 of its total potential returns per unit of risk. KIMBALL ELECTRONICS is currently generating about -0.01 per unit of volatility. If you would invest  2,140  in KIMBALL ELECTRONICS on September 24, 2024 and sell it today you would lose (410.00) from holding KIMBALL ELECTRONICS or give up 19.16% of portfolio value over 90 days.

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

HYDROFARM HLD GRP  vs.  KIMBALL ELECTRONICS

HYDROFARM HLD GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYDROFARM HLD GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HYDROFARM HLD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

KIMBALL ELECTRONICS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KIMBALL ELECTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HYDROFARM HLD and KIMBALL ELECTRONICS

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

The idea behind HYDROFARM HLD GRP and KIMBALL ELECTRONICS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.