Correlation Between Kimball Electronics and Flux Power

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

By analyzing existing cross correlation between Kimball Electronics and Flux Power Holdings, you can compare the effects of market volatilities on Kimball Electronics and Flux Power 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 Flux Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Flux Power.

Diversification Opportunities for Kimball Electronics and Flux Power

0.48

Correlation Coefficient

Kimball Electronics  Flux Power

Very weak diversification

The 3 months correlation between Kimball and Flux is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Flux Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flux Power Holdings 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 Flux Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flux Power Holdings has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Flux Power go up and down completely randomly.

Pair Corralation between Kimball Electronics and Flux Power

Allowing for the 90-day total investment horizon Kimball Electronics is expected to under-perform the Flux Power. But the stock apears to be less risky and, when comparing its historical volatility, Kimball Electronics is 1.78 times less risky than Flux Power. The stock trades about -0.09 of its potential returns per unit of risk. The Flux Power Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  488.00  in Flux Power Holdings on January 24, 2024 and sell it today you would lose (83.00) from holding Flux Power Holdings or give up 17.01% of portfolio value over 90 days.

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

Kimball Electronics  vs.  Flux Power Holdings

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.

Flux Power Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flux Power Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kimball Electronics and Flux Power

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

The idea behind Kimball Electronics and Flux Power Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.