Correlation Between FuelPositive Corp and Kimball Electronics

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

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

Diversification Opportunities for FuelPositive Corp and Kimball Electronics

0.13

Correlation Coefficient

FuelPositive Corp  Kimball Electronics

Average diversification

The 3 months correlation between FuelPositive and Kimball is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FuelPositive Corp and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and FuelPositive Corp 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 FuelPositive Corp 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 FuelPositive Corp i.e., FuelPositive Corp and Kimball Electronics go up and down completely randomly.

Pair Corralation between FuelPositive Corp and Kimball Electronics

Assuming the 90 days horizon FuelPositive Corp is expected to generate 0.87 times more return on investment than Kimball Electronics. However, FuelPositive Corp is 1.15 times less risky than Kimball Electronics. It trades about 0.01 of its potential returns per unit of risk. Kimball Electronics is currently generating about -0.09 per unit of risk. 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

FuelPositive Corp  vs.  Kimball Electronics

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.

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 FuelPositive Corp and Kimball Electronics

The main advantage of trading using opposite FuelPositive Corp and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelPositive Corp 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 FuelPositive Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.