Correlation Between Hayward Holdings and Kimball Electronics

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

By analyzing existing cross correlation between Hayward Holdings and Kimball Electronics, you can compare the effects of market volatilities on Hayward Holdings 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 Hayward Holdings with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hayward Holdings and Kimball Electronics.

Diversification Opportunities for Hayward Holdings and Kimball Electronics

0.72

Correlation Coefficient

Hayward Holdings  Kimball Electronics

Poor diversification

The 3 months correlation between Hayward and Kimball is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hayward Holdings and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and Hayward Holdings 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 Hayward Holdings 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 Hayward Holdings i.e., Hayward Holdings and Kimball Electronics go up and down completely randomly.

Pair Corralation between Hayward Holdings and Kimball Electronics

Given the investment horizon of 90 days Hayward Holdings is expected to under-perform the Kimball Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Hayward Holdings is 1.05 times less risky than Kimball Electronics. The stock trades about -0.09 of its potential returns per unit of risk. The Kimball Electronics is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,858  in Kimball Electronics on December 29, 2024 and sell it today you would lose (172.00) from holding Kimball Electronics or give up 9.26% of portfolio value over 90 days.

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

Hayward Holdings  vs.  Kimball Electronics

Hayward Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hayward Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hayward Holdings and Kimball Electronics

The main advantage of trading using opposite Hayward Holdings and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hayward Holdings 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' long position.

The idea behind Hayward Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.