Correlation Between Kimball Electronics and Digi International

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

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

Diversification Opportunities for Kimball Electronics and Digi International

-0.21

Correlation Coefficient

Kimball Electronics  Digi International

Very good diversification

The 3 months correlation between Kimball and Digi is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and Digi International go up and down completely randomly.

Pair Corralation between Kimball Electronics and Digi International

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 0.84 times more return on investment than Digi International. However, Kimball Electronics is 1.19 times less risky than Digi International. It trades about 0.02 of its potential returns per unit of risk. Digi International is currently generating about -0.01 per unit of risk. If you would invest  2,215  in Kimball Electronics on February 10, 2024 and sell it today you would earn a total of  47.00  from holding Kimball Electronics or generate 2.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Kimball Electronics  vs.  Digi International

Kimball Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kimball Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kimball Electronics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Digi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Kimball Electronics and Digi International

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

The idea behind Kimball Electronics and Digi International 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 Valuation module to check real value of public entities based on technical and fundamental data.