Correlation Between Kaiser Aluminum and Aluminum Corp

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

Diversification Opportunities for Kaiser Aluminum and Aluminum Corp

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Kaiser and Aluminum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Aluminum Corp Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp and Kaiser Aluminum 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 Kaiser Aluminum are associated (or correlated) with Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Aluminum Corp go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Aluminum Corp

If you would invest  9,564  in Kaiser Aluminum on December 29, 2023 and sell it today you would lose (744.00) from holding Kaiser Aluminum or give up 7.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Kaiser Aluminum  vs.  Aluminum Corp Of

 Performance 
       Timeline  
Kaiser Aluminum 

Risk-Adjusted Performance

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Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Kaiser Aluminum unveiled solid returns over the last few months and may actually be approaching a breakup point.
Aluminum Corp 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Aluminum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Aluminum Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Kaiser Aluminum and Aluminum Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kaiser Aluminum and Aluminum Corp

The main advantage of trading using opposite Kaiser Aluminum and Aluminum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Aluminum Corp 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 Aluminum Corp will offset losses from the drop in Aluminum Corp's long position.
The idea behind Kaiser Aluminum and Aluminum Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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