Correlation Between Abb and Kimball Electrnc

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

Diversification Opportunities for Abb and Kimball Electrnc

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Abb and Kimball is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Abb Ltd ADR and Kimball Electrnc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electrnc and Abb 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 Abb Ltd ADR are associated (or correlated) with Kimball Electrnc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimball Electrnc has no effect on the direction of Abb i.e., Abb and Kimball Electrnc go up and down completely randomly.

Pair Corralation between Abb and Kimball Electrnc

Considering the 90-day investment horizon Abb is expected to generate 10.27 times less return on investment than Kimball Electrnc. But when comparing it to its historical volatility, Abb Ltd ADR is 1.59 times less risky than Kimball Electrnc. It trades about 0.0 of its potential returns per unit of risk. Kimball Electrnc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,394  in Kimball Electrnc on July 3, 2022 and sell it today you would earn a total of  321.00  from holding Kimball Electrnc or generate 23.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Abb Ltd ADR  vs.  Kimball Electrnc

 Performance (%) 
       Timeline  
Abb Ltd ADR 
Abb Performance
0 of 100
Over the last 90 days Abb Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Abb is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Abb Price Channel

Kimball Electrnc 
Kimball Performance
0 of 100
Over the last 90 days Kimball Electrnc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kimball Price Channel

Abb and Kimball Electrnc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Abb and Kimball Electrnc

The main advantage of trading using opposite Abb and Kimball Electrnc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abb position performs unexpectedly, Kimball Electrnc 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 Electrnc will offset losses from the drop in Kimball Electrnc's long position.
Abb vs. Amazon Inc
The idea behind Abb Ltd ADR and Kimball Electrnc 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.
Kimball Electrnc vs. Amazon Inc
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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