Correlation Between Cumberland Pharmaceuticals and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Kaiser Aluminum, you can compare the effects of market volatilities on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Kaiser Aluminum.
Diversification Opportunities for Cumberland Pharmaceuticals and Kaiser Aluminum
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cumberland and Kaiser is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Kaiser Aluminum
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the Kaiser Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Cumberland Pharmaceuticals is 1.18 times less risky than Kaiser Aluminum. The stock trades about -0.34 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,607 in Kaiser Aluminum on August 28, 2024 and sell it today you would earn a total of 771.00 from holding Kaiser Aluminum or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Kaiser Aluminum
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Kaiser Aluminum |
Cumberland Pharmaceuticals and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Kaiser Aluminum
The main advantage of trading using opposite Cumberland Pharmaceuticals and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals 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.| Cumberland Pharmaceuticals vs. Capricor Therapeutics | Cumberland Pharmaceuticals vs. Soleno Therapeutics | Cumberland Pharmaceuticals vs. Bio Path Holdings | Cumberland Pharmaceuticals vs. Moleculin Biotech |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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