Correlation Between Kimball Electronics and King Resources

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

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

Diversification Opportunities for Kimball Electronics and King Resources

0.01

Correlation Coefficient

Kimball Electronics  King Resources

Significant diversification

The 3 months correlation between Kimball and King is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and King Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Resources 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 King Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Resources has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and King Resources go up and down completely randomly.

Pair Corralation between Kimball Electronics and King Resources

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the King Resources. But the stock apears to be less risky and, when comparing its historical volatility, Kimball Electronics is 17.2 times less risky than King Resources. The stock trades about -0.1 of its potential returns per unit of risk. The King Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.02  in King Resources on September 15, 2024 and sell it today you would earn a total of  0.00  from holding King Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Kimball Electronics  vs.  King Resources

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. In spite of rather abnormal technical and fundamental indicators, Kimball Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

King Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, King Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kimball Electronics and King Resources

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

The idea behind Kimball Electronics and King Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.