Correlation Between Kaiser Aluminum and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and SHELF DRILLING 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 SHELF DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and SHELF DRILLING LTD, you can compare the effects of market volatilities on Kaiser Aluminum and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and SHELF DRILLING.
Diversification Opportunities for Kaiser Aluminum and SHELF DRILLING
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kaiser and SHELF is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and SHELF DRILLING go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and SHELF DRILLING
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 0.48 times more return on investment than SHELF DRILLING. However, Kaiser Aluminum is 2.07 times less risky than SHELF DRILLING. It trades about 0.08 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.11 per unit of risk. If you would invest 6,618 in Kaiser Aluminum on September 2, 2024 and sell it today you would earn a total of 882.00 from holding Kaiser Aluminum or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. SHELF DRILLING LTD
Performance |
| Timeline |
| Kaiser Aluminum |
| SHELF DRILLING LTD |
Kaiser Aluminum and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and SHELF DRILLING
The main advantage of trading using opposite Kaiser Aluminum and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.The idea behind Kaiser Aluminum and SHELF DRILLING LTD 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.| SHELF DRILLING vs. United Natural Foods | SHELF DRILLING vs. PT Indofood Sukses | SHELF DRILLING vs. Dairy Farm International | SHELF DRILLING vs. TYSON FOODS A |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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