Correlation Between Japan Asia and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Japan Asia 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 Japan Asia and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and Kaiser Aluminum, you can compare the effects of market volatilities on Japan Asia 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 Japan Asia with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Kaiser Aluminum.
Diversification Opportunities for Japan Asia and Kaiser Aluminum
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and Kaiser is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Japan Asia 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 Japan Asia Investment 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 Japan Asia i.e., Japan Asia and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Japan Asia and Kaiser Aluminum
Assuming the 90 days horizon Japan Asia is expected to generate 35.3 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, Japan Asia Investment is 1.03 times less risky than Kaiser Aluminum. It trades about 0.01 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,525 in Kaiser Aluminum on October 29, 2024 and sell it today you would earn a total of 375.00 from holding Kaiser Aluminum or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. Kaiser Aluminum
Performance |
| Timeline |
| Japan Asia Investment |
| Kaiser Aluminum |
Japan Asia and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Kaiser Aluminum
The main advantage of trading using opposite Japan Asia and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia 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.| Japan Asia vs. Air Lease | Japan Asia vs. X FAB Silicon Foundries | Japan Asia vs. Lendlease Group | Japan Asia vs. GRENKELEASING Dusseldorf |
| Kaiser Aluminum vs. NorAm Drilling AS | Kaiser Aluminum vs. Ebro Foods SA | Kaiser Aluminum vs. Lery Seafood Group | Kaiser Aluminum vs. AWILCO DRILLING PLC |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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