Correlation Between Kaiser Aluminum and HEXINDO ADIPERKASA

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Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and HEXINDO ADIPERKASA, you can compare the effects of market volatilities on Kaiser Aluminum and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and HEXINDO ADIPERKASA.

Diversification Opportunities for Kaiser Aluminum and HEXINDO ADIPERKASA

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Kaiser and HEXINDO is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and HEXINDO ADIPERKASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXINDO ADIPERKASA has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and HEXINDO ADIPERKASA go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and HEXINDO ADIPERKASA

Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the HEXINDO ADIPERKASA. In addition to that, Kaiser Aluminum is 3.56 times more volatile than HEXINDO ADIPERKASA. It trades about -0.14 of its total potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about -0.21 per unit of volatility. If you would invest  31.00  in HEXINDO ADIPERKASA on September 15, 2024 and sell it today you would lose (1.00) from holding HEXINDO ADIPERKASA or give up 3.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kaiser Aluminum  vs.  HEXINDO ADIPERKASA

 Performance 
       Timeline  
Kaiser Aluminum 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kaiser Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.
HEXINDO ADIPERKASA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Kaiser Aluminum and HEXINDO ADIPERKASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kaiser Aluminum and HEXINDO ADIPERKASA

The main advantage of trading using opposite Kaiser Aluminum and HEXINDO ADIPERKASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA will offset losses from the drop in HEXINDO ADIPERKASA's long position.
The idea behind Kaiser Aluminum and HEXINDO ADIPERKASA 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.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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