Correlation Between Kaiser Aluminum and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Deutsche Telekom 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 Deutsche Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Deutsche Telekom AG, you can compare the effects of market volatilities on Kaiser Aluminum and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Deutsche Telekom.
Diversification Opportunities for Kaiser Aluminum and Deutsche Telekom
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and Deutsche is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Deutsche Telekom go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Deutsche Telekom
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.67 times more return on investment than Deutsche Telekom. However, Kaiser Aluminum is 1.67 times more volatile than Deutsche Telekom AG. It trades about 0.13 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.18 per unit of risk. If you would invest 6,421 in Kaiser Aluminum on September 3, 2024 and sell it today you would earn a total of 1,079 from holding Kaiser Aluminum or generate 16.8% 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. Deutsche Telekom AG
Performance |
| Timeline |
| Kaiser Aluminum |
| Deutsche Telekom |
Kaiser Aluminum and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Deutsche Telekom
The main advantage of trading using opposite Kaiser Aluminum and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| Kaiser Aluminum vs. Norsk Hydro ASA | Kaiser Aluminum vs. Aluminum of | Kaiser Aluminum vs. Superior Plus Corp | Kaiser Aluminum vs. NMI Holdings |
| Deutsche Telekom vs. ADRIATIC METALS LS 013355 | Deutsche Telekom vs. ARDAGH METAL PACDL 0001 | Deutsche Telekom vs. United Natural Foods | Deutsche Telekom vs. Kaiser Aluminum |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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