Correlation Between Kaiser Aluminum and Chemours
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Chemours 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 Kaiser Aluminum and Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Chemours Co, you can compare the effects of market volatilities on Kaiser Aluminum and Chemours 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 Kaiser Aluminum with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Chemours.
Diversification Opportunities for Kaiser Aluminum and Chemours
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and Chemours is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Kaiser Aluminum 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 Kaiser Aluminum are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Chemours go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Chemours
Given the investment horizon of 90 days Kaiser Aluminum is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, Kaiser Aluminum is 1.14 times less risky than Chemours. The stock trades about -0.03 of its potential returns per unit of risk. The Chemours Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,376 in Chemours Co on September 1, 2024 and sell it today you would lose (202.00) from holding Chemours Co or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Chemours Co
Performance |
| Timeline |
| Kaiser Aluminum |
| Chemours |
Kaiser Aluminum and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Chemours
The main advantage of trading using opposite Kaiser Aluminum and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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