Correlation Between Kimball Electronics and FuelPositive Corp

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

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

Diversification Opportunities for Kimball Electronics and FuelPositive Corp

0.13

Correlation Coefficient

Kimball Electronics  FuelPositive Corp

Average diversification

The 3 months correlation between Kimball and FuelPositive is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and FuelPositive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelPositive Corp 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 FuelPositive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelPositive Corp has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and FuelPositive Corp go up and down completely randomly.

Pair Corralation between Kimball Electronics and FuelPositive Corp

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the FuelPositive Corp. In addition to that, Kimball Electronics is 1.15 times more volatile than FuelPositive Corp. It trades about -0.09 of its total potential returns per unit of risk. FuelPositive Corp is currently generating about 0.01 per unit of volatility. If you would invest  2.00  in FuelPositive Corp on December 30, 2024 and sell it today you would earn a total of  0.00  from holding FuelPositive Corp or generate 0.0% return on investment over 90 days.

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

Kimball Electronics  vs.  FuelPositive Corp

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.

FuelPositive Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kimball Electronics and FuelPositive Corp

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

The idea behind Kimball Electronics and FuelPositive Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.