Correlation Between American Defense and Kimball Electrnc

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

Diversification Opportunities for American Defense and Kimball Electrnc

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between American and Kimball is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding American Defense Systems and Kimball Electrnc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimball Electrnc and American Defense 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 American Defense Systems 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 American Defense i.e., American Defense and Kimball Electrnc go up and down completely randomly.

Pair Corralation between American Defense and Kimball Electrnc

Given the investment horizon of 90 days American Defense Systems is expected to under-perform the Kimball Electrnc. In addition to that, American Defense is 8.72 times more volatile than Kimball Electrnc. It trades about -0.22 of its total potential returns per unit of risk. Kimball Electrnc is currently generating about -0.44 per unit of volatility. If you would invest  2,154  in Kimball Electrnc on July 2, 2022 and sell it today you would lose (402.00)  from holding Kimball Electrnc or give up 18.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

American Defense Systems  vs.  Kimball Electrnc

 Performance (%) 
       Timeline  
American Defense Systems 
American Performance
0 of 100
Over the last 90 days American Defense Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

American 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 October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kimball Price Channel

American Defense and Kimball Electrnc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Defense and Kimball Electrnc

The main advantage of trading using opposite American Defense and Kimball Electrnc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Defense 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.
American Defense vs. Amazon Inc
The idea behind American Defense Systems 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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