Correlation Between Kaiser Aluminum and AUSNUTRIA DAIRY
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and AUSNUTRIA DAIRY, you can compare the effects of market volatilities on Kaiser Aluminum and AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and AUSNUTRIA DAIRY.
Diversification Opportunities for Kaiser Aluminum and AUSNUTRIA DAIRY
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaiser and AUSNUTRIA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and AUSNUTRIA DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSNUTRIA DAIRY has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and AUSNUTRIA DAIRY go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and AUSNUTRIA DAIRY
If you would invest 6,850 in Kaiser Aluminum on September 2, 2024 and sell it today you would earn a total of 650.00 from holding Kaiser Aluminum or generate 9.49% 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. AUSNUTRIA DAIRY
Performance |
| Timeline |
| Kaiser Aluminum |
| AUSNUTRIA DAIRY |
Kaiser Aluminum and AUSNUTRIA DAIRY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and AUSNUTRIA DAIRY
The main advantage of trading using opposite Kaiser Aluminum and AUSNUTRIA DAIRY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, AUSNUTRIA DAIRY 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 AUSNUTRIA DAIRY will offset losses from the drop in AUSNUTRIA DAIRY's long position.The idea behind Kaiser Aluminum and AUSNUTRIA DAIRY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AUSNUTRIA DAIRY vs. Apollo Investment Corp | AUSNUTRIA DAIRY vs. NTG Nordic Transport | AUSNUTRIA DAIRY vs. Nishi Nippon Railroad Co | AUSNUTRIA DAIRY vs. AOYAMA TRADING |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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