Correlation Between Kimball Electronics and ScanSource

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

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

Diversification Opportunities for Kimball Electronics and ScanSource

0.75

Correlation Coefficient

Kimball Electronics  ScanSource

Poor diversification

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

Pair Corralation between Kimball Electronics and ScanSource

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 1.4 times more return on investment than ScanSource. However, Kimball Electronics is 1.4 times more volatile than ScanSource. It trades about -0.01 of its potential returns per unit of risk. ScanSource is currently generating about -0.06 per unit of risk. If you would invest  2,871  in Kimball Electronics on August 26, 2025 and sell it today you would lose (95.00) from holding Kimball Electronics or give up 3.31% of portfolio value over 90 days.

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

Kimball Electronics  vs.  ScanSource

Kimball Electronics

Risk-Adjusted Performance

Weakest

Over the last 90 days Kimball Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Kimball Electronics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

ScanSource

Risk-Adjusted Performance

Weakest

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kimball Electronics and ScanSource

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

The idea behind Kimball Electronics and ScanSource 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.