Correlation Between KIMBALL ELECTRONICS and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and Meiko 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 KIMBALL ELECTRONICS and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and Meiko Electronics Co, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and Meiko 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 KIMBALL ELECTRONICS with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Meiko Electronics.
Diversification Opportunities for KIMBALL ELECTRONICS and Meiko Electronics
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KIMBALL and Meiko is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Meiko Electronics go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and Meiko Electronics
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 1.39 times more return on investment than Meiko Electronics. However, KIMBALL ELECTRONICS is 1.39 times more volatile than Meiko Electronics Co. It trades about 0.18 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.08 per unit of risk. If you would invest 1,130 in KIMBALL ELECTRONICS on April 21, 2025 and sell it today you would earn a total of 520.00 from holding KIMBALL ELECTRONICS or generate 46.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KIMBALL ELECTRONICS vs. Meiko Electronics Co
Performance |
Timeline |
KIMBALL ELECTRONICS |
Meiko Electronics |
KIMBALL ELECTRONICS and Meiko Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KIMBALL ELECTRONICS and Meiko Electronics
The main advantage of trading using opposite KIMBALL ELECTRONICS and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS position performs unexpectedly, Meiko 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.The idea behind KIMBALL ELECTRONICS and Meiko Electronics Co 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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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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