Correlation Between Kimball Electronics and Bloom Energy

Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Bloom 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 Bloom 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 Bloom Energy Corp, you can compare the effects of market volatilities on Kimball Electronics and Bloom 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 Bloom Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Bloom Energy.

Diversification Opportunities for Kimball Electronics and Bloom Energy

0.37

Correlation Coefficient

Kimball Electronics  Bloom Energy

Weak diversification

The 3 months correlation between Kimball and Bloom is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy 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 Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Bloom Energy go up and down completely randomly.

Pair Corralation between Kimball Electronics and Bloom Energy

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 0.59 times more return on investment than Bloom Energy. However, Kimball Electronics is 1.69 times less risky than Bloom Energy. It trades about -0.04 of its potential returns per unit of risk. Bloom Energy Corp is currently generating about -0.05 per unit of risk. If you would invest  2,690  in Kimball Electronics on January 24, 2024 and sell it today you would lose (601.00) from holding Kimball Electronics or give up 22.34% of portfolio value over 90 days.

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

Kimball Electronics  vs.  Bloom Energy Corp

Kimball Electronics

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bloom Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloom Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kimball Electronics and Bloom Energy

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

The idea behind Kimball Electronics and Bloom Energy 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.