Correlation Between Deswell Industries and Kimball Electronics
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Kimball 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 Deswell Industries and Kimball Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Kimball Electronics, you can compare the effects of market volatilities on Deswell Industries and Kimball 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 Deswell Industries with a short position of Kimball Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Kimball Electronics.
Diversification Opportunities for Deswell Industries and Kimball Electronics
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deswell and Kimball is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Kimball Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electronics and Deswell Industries 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 Deswell Industries are associated (or correlated) with Kimball Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball Electronics has no effect on the direction of Deswell Industries i.e., Deswell Industries and Kimball Electronics go up and down completely randomly.
Pair Corralation between Deswell Industries and Kimball Electronics
Given the investment horizon of 90 days Deswell Industries is expected to generate 1.33 times more return on investment than Kimball Electronics. However, Deswell Industries is 1.33 times more volatile than Kimball Electronics. It trades about 0.1 of its potential returns per unit of risk. Kimball Electronics is currently generating about -0.17 per unit of risk. If you would invest 224.00 in Deswell Industries on January 28, 2024 and sell it today you would earn a total of 6.00 from holding Deswell Industries or generate 2.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Deswell Industries vs. Kimball Electronics
Performance |
Timeline |
Deswell Industries |
Kimball Electronics |
Deswell Industries and Kimball Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deswell Industries and Kimball Electronics
The main advantage of trading using opposite Deswell Industries and Kimball Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Kimball 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 Kimball Electronics will offset losses from the drop in Kimball Electronics' long position.Deswell Industries vs. VOXX International | Deswell Industries vs. Vizio Holding Corp | Deswell Industries vs. Turtle Beach Corp | Deswell Industries vs. Emerson Radio |
Kimball Electronics vs. VOXX International | Kimball Electronics vs. Vizio Holding Corp | Kimball Electronics vs. Turtle Beach Corp | Kimball Electronics vs. Emerson Radio |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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