Correlation Between Kaiser Aluminum and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and POSCO Holdings 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 POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and POSCO Holdings, you can compare the effects of market volatilities on Kaiser Aluminum and POSCO Holdings 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 POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and POSCO Holdings.
Diversification Opportunities for Kaiser Aluminum and POSCO Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and POSCO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings 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 POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and POSCO Holdings go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and POSCO Holdings
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.19 times more return on investment than POSCO Holdings. However, Kaiser Aluminum is 1.19 times more volatile than POSCO Holdings. It trades about 0.03 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.11 per unit of risk. If you would invest 6,109 in Kaiser Aluminum on November 3, 2024 and sell it today you would earn a total of 891.00 from holding Kaiser Aluminum or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. POSCO Holdings
Performance |
| Timeline |
| Kaiser Aluminum |
| POSCO Holdings |
Kaiser Aluminum and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and POSCO Holdings
The main advantage of trading using opposite Kaiser Aluminum and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR | POSCO Holdings vs. Steel Dynamics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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