Correlation Between Kimball Electronics and LightPath Technologies

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

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

Diversification Opportunities for Kimball Electronics and LightPath Technologies

0.51

Correlation Coefficient

Kimball Electronics  LightPath Technologies

Very weak diversification

The 3 months correlation between Kimball and LightPath is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics and LightPath Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightPath Technologies 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 LightPath Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightPath Technologies has no effect on the direction of Kimball Electronics i.e., Kimball Electronics and LightPath Technologies go up and down completely randomly.

Pair Corralation between Kimball Electronics and LightPath Technologies

Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 0.57 times more return on investment than LightPath Technologies. However, Kimball Electronics is 1.75 times less risky than LightPath Technologies. It trades about -0.07 of its potential returns per unit of risk. LightPath Technologies is currently generating about -0.05 per unit of risk. If you would invest  1,753  in Kimball Electronics on February 3, 2025 and sell it today you would lose (261.00) from holding Kimball Electronics or give up 14.89% of portfolio value over 90 days.

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

Kimball Electronics  vs.  LightPath Technologies

Kimball Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimball Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

LightPath Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days LightPath Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kimball Electronics and LightPath Technologies

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

The idea behind Kimball Electronics and LightPath Technologies 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.