Correlation Between Hyster Yale and Kaiser Aluminum

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Hyster Yale and Kaiser Aluminum 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 Hyster Yale and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyster Yale Materials Handling and Kaiser Aluminum, you can compare the effects of market volatilities on Hyster Yale and Kaiser Aluminum 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 Hyster Yale with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster Yale and Kaiser Aluminum.

Diversification Opportunities for Hyster Yale and Kaiser Aluminum

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Hyster and Kaiser is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Hyster Yale i.e., Hyster Yale and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Hyster Yale and Kaiser Aluminum

Assuming the 90 days trading horizon Hyster Yale is expected to generate 3.32 times less return on investment than Kaiser Aluminum. In addition to that, Hyster Yale is 1.08 times more volatile than Kaiser Aluminum. It trades about 0.04 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.14 per unit of volatility. If you would invest  5,976  in Kaiser Aluminum on September 10, 2024 and sell it today you would earn a total of  1,524  from holding Kaiser Aluminum or generate 25.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hyster Yale Materials Handling  vs.  Kaiser Aluminum

 Performance 
       Timeline  
Hyster Yale Materials 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Hyster Yale Materials Handling are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Hyster Yale may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Kaiser Aluminum 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kaiser Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

Hyster Yale and Kaiser Aluminum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hyster Yale and Kaiser Aluminum

The main advantage of trading using opposite Hyster Yale and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.
The idea behind Hyster Yale Materials Handling and Kaiser Aluminum 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios