Correlation Between Kaiser Aluminum and Stepan
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Stepan Company, you can compare the effects of market volatilities on Kaiser Aluminum and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Stepan.
Diversification Opportunities for Kaiser Aluminum and Stepan
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaiser and Stepan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Stepan go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Stepan
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.09 times more return on investment than Stepan. However, Kaiser Aluminum is 1.09 times more volatile than Stepan Company. It trades about 0.18 of its potential returns per unit of risk. Stepan Company is currently generating about 0.14 per unit of risk. If you would invest 7,426 in Kaiser Aluminum on September 1, 2024 and sell it today you would earn a total of 702.00 from holding Kaiser Aluminum or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Stepan Company
Performance |
| Timeline |
| Kaiser Aluminum |
| Stepan Company |
Kaiser Aluminum and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Stepan
The main advantage of trading using opposite Kaiser Aluminum and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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