Correlation Between KLA Tencor and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Kaiser Aluminum, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Kaiser Aluminum.
Diversification Opportunities for KLA Tencor and Kaiser Aluminum
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KLA and Kaiser is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between KLA Tencor and Kaiser Aluminum
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Kaiser Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, KLA Tencor is 1.41 times less risky than Kaiser Aluminum. The stock trades about -0.2 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,675 in Kaiser Aluminum on August 31, 2024 and sell it today you would earn a total of 491.00 from holding Kaiser Aluminum or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Kaiser Aluminum
Performance |
| Timeline |
| KLA Tencor |
| Kaiser Aluminum |
KLA Tencor and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Kaiser Aluminum
The main advantage of trading using opposite KLA Tencor and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| Kaiser Aluminum vs. RLJ Lodging Trust | Kaiser Aluminum vs. Aquagold International | Kaiser Aluminum vs. Stepstone Group | Kaiser Aluminum vs. Morningstar Unconstrained Allocation |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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