Correlation Between Kimball Electronics and Nexera Energy

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

Diversification Opportunities for Kimball Electronics and Nexera Energy

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Kimball and Nexera is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Nexera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexera Energy 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 Nexera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexera Energy has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Nexera Energy go up and down completely randomly.

Pair Corralation between Kimball Electronics and Nexera Energy

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 30.82 times less return on investment than Nexera Energy. But when comparing it to its historical volatility, Kimball Electronics is 15.98 times less risky than Nexera Energy. It trades about 0.03 of its potential returns per unit of risk. Nexera Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.94  in Nexera Energy on December 29, 2023 and sell it today you would lose (2.58) from holding Nexera Energy or give up 87.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kimball Electronics  vs.  Nexera Energy

 Performance 
       Timeline  
Kimball Electronics 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Nexera Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kimball Electronics and Nexera Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kimball Electronics and Nexera Energy

The main advantage of trading using opposite Kimball Electronics and Nexera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Nexera 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 Nexera Energy will offset losses from the drop in Nexera Energy's long position.
The idea behind Kimball Electronics and Nexera Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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