Correlation Between King Resources and Kimball Electronics

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

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

Diversification Opportunities for King Resources and Kimball Electronics

0.26

Correlation Coefficient

King Resources  Kimball Electronics

Modest diversification

The 3 months correlation between King and Kimball is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding King Resources and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and King Resources 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 King Resources are associated (or correlated) with Kimball Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball Electronics has no effect on the direction of King Resources i.e., King Resources and Kimball Electronics go up and down completely randomly.

Pair Corralation between King Resources and Kimball Electronics

Given the investment horizon of 90 days King Resources is expected to generate 17.96 times more return on investment than Kimball Electronics. However, King Resources is 17.96 times more volatile than Kimball Electronics. It trades about 0.11 of its potential returns per unit of risk. Kimball Electronics is currently generating about -0.08 per unit of risk. If you would invest  0.02  in King Resources on December 24, 2024 and sell it today you would lose (0.01) from holding King Resources or give up 50.0% of portfolio value over 90 days.

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

King Resources  vs.  Kimball Electronics

King Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 8 (%) 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.

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.

Pair Trading with King Resources and Kimball Electronics

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

The idea behind King Resources and Kimball Electronics 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.