Correlation Between Kimball Electronics and SigmaTron International

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

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

Diversification Opportunities for Kimball Electronics and SigmaTron International

0.24

Correlation Coefficient

Kimball Electronics  SigmaTron International

Modest diversification

The 3 months correlation between Kimball and SigmaTron is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and SigmaTron International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SigmaTron International 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 SigmaTron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SigmaTron International has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and SigmaTron International go up and down completely randomly.

Pair Corralation between Kimball Electronics and SigmaTron International

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 0.43 times more return on investment than SigmaTron International. However, Kimball Electronics is 2.3 times less risky than SigmaTron International. It trades about 0.08 of its potential returns per unit of risk. SigmaTron International is currently generating about -0.15 per unit of risk. If you would invest  1,768  in Kimball Electronics on October 23, 2024 and sell it today you would earn a total of  149.00  from holding Kimball Electronics or generate 8.43% return on investment over 90 days.

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

Kimball Electronics  vs.  SigmaTron International

Kimball Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 6 (%) 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 February 2025.

SigmaTron International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SigmaTron International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kimball Electronics and SigmaTron International

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

The idea behind Kimball Electronics and SigmaTron International 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.

Check out your portfolio center.

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.