Correlation Between Kimball Electronics and HP

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

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

Diversification Opportunities for Kimball Electronics and HP

0.22

Correlation Coefficient

Kimball Electronics  HP

Modest diversification

The 3 months correlation between Kimball and HP is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and HP go up and down completely randomly.

Pair Corralation between Kimball Electronics and HP

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the HP. In addition to that, Kimball Electronics is 1.02 times more volatile than HP Inc. It trades about -0.14 of its total potential returns per unit of risk. HP Inc is currently generating about -0.12 per unit of volatility. If you would invest  3,465  in HP Inc on October 11, 2024 and sell it today you would lose (120.00) from holding HP Inc or give up 3.46% of portfolio value over 90 days.

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

Kimball Electronics  vs.  HP Inc

Kimball Electronics

Risk-Adjusted Performance

3 of 100

Modest

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. In spite of rather sound technical and fundamental indicators, Kimball Electronics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Kimball Electronics and HP

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

The idea behind Kimball Electronics and HP Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.