Correlation Between Kimball Electronics and Enersys

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Can any of the company-specific risk be diversified away by investing in both Kimball Electronics and Enersys 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 Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Enersys, you can compare the effects of market volatilities on Kimball Electronics and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Enersys.

Diversification Opportunities for Kimball Electronics and Enersys

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kimball and Enersys is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Enersys go up and down completely randomly.

Pair Corralation between Kimball Electronics and Enersys

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.38 times more return on investment than Enersys. However, Kimball Electronics is 1.38 times more volatile than Enersys. It trades about 0.08 of its potential returns per unit of risk. Enersys is currently generating about 0.04 per unit of risk. If you would invest  2,008  in Kimball Electronics on January 17, 2024 and sell it today you would earn a total of  54.00  from holding Kimball Electronics or generate 2.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Kimball Electronics  vs.  Enersys

 Performance 
       Timeline  
Kimball Electronics 

Risk-Adjusted Performance

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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.
Enersys 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kimball Electronics and Enersys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kimball Electronics and Enersys

The main advantage of trading using opposite Kimball Electronics and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.
The idea behind Kimball Electronics and Enersys 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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