Correlation Between Kimball Electronics and Magnis Energy

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

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

Diversification Opportunities for Kimball Electronics and Magnis Energy

-0.7

Correlation Coefficient

Kimball Electronics  Magnis Energy

Excellent diversification

The 3 months correlation between Kimball and Magnis is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Magnis Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnis Energy Techno 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 Magnis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnis Energy Techno has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Magnis Energy go up and down completely randomly.

Pair Corralation between Kimball Electronics and Magnis Energy

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Magnis Energy. But the stock apears to be less risky and, when comparing its historical volatility, Kimball Electronics is 8.25 times less risky than Magnis Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Magnis Energy Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Magnis Energy Technologies on December 28, 2024 and sell it today you would earn a total of  0.65  from holding Magnis Energy Technologies or generate 26.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Kimball Electronics  vs.  Magnis Energy Technologies

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 unfluctuating 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.

Magnis Energy Techno

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnis Energy Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Magnis Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kimball Electronics and Magnis Energy

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

The idea behind Kimball Electronics and Magnis Energy Technologies 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.