Correlation Between Vita Coco and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Vita Coco 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 Vita Coco and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and Kaiser Aluminum, you can compare the effects of market volatilities on Vita Coco 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 Vita Coco with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Kaiser Aluminum.
Diversification Opportunities for Vita Coco and Kaiser Aluminum
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vita and Kaiser is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Vita Coco and Kaiser Aluminum
Given the investment horizon of 90 days Vita Coco is expected to generate 1.56 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, Vita Coco is 1.03 times less risky than Kaiser Aluminum. It trades about 0.05 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,580 in Kaiser Aluminum on August 24, 2024 and sell it today you would earn a total of 2,709 from holding Kaiser Aluminum or generate 48.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. Kaiser Aluminum
Performance |
| Timeline |
| Vita Coco |
| Kaiser Aluminum |
Vita Coco and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and Kaiser Aluminum
The main advantage of trading using opposite Vita Coco and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
| Kaiser Aluminum vs. Eshallgo Class A | Kaiser Aluminum vs. Amtech Systems | Kaiser Aluminum vs. Gold Fields Ltd | Kaiser Aluminum vs. Aegean Airlines SA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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