Correlation Between Global Ship and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Kaiser Aluminum, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Kaiser Aluminum.
Diversification Opportunities for Global Ship and Kaiser Aluminum
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Kaiser is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Global Ship and Kaiser Aluminum
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.31 times more return on investment than Kaiser Aluminum. However, Global Ship Lease is 3.26 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 0.01 per unit of risk. If you would invest 2,176 in Global Ship Lease on September 3, 2024 and sell it today you would earn a total of 460.00 from holding Global Ship Lease or generate 21.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Kaiser Aluminum
Performance |
| Timeline |
| Global Ship Lease |
| Kaiser Aluminum |
Global Ship and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Kaiser Aluminum
The main advantage of trading using opposite Global Ship and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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.| Kaiser Aluminum vs. SPACE | Kaiser Aluminum vs. Ampleforth | Kaiser Aluminum vs. ionet | Kaiser Aluminum vs. Memecoin |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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