Correlation Between Kaiser Aluminum and SCANDMEDICAL SOLDK-040
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and SCANDMEDICAL SOLDK 040, you can compare the effects of market volatilities on Kaiser Aluminum and SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and SCANDMEDICAL SOLDK-040.
Diversification Opportunities for Kaiser Aluminum and SCANDMEDICAL SOLDK-040
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kaiser and SCANDMEDICAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and SCANDMEDICAL SOLDK 040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDMEDICAL SOLDK 040 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 SCANDMEDICAL SOLDK-040. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDMEDICAL SOLDK 040 has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and SCANDMEDICAL SOLDK-040 go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and SCANDMEDICAL SOLDK-040
Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the SCANDMEDICAL SOLDK-040. In addition to that, Kaiser Aluminum is 1.15 times more volatile than SCANDMEDICAL SOLDK 040. It trades about -0.03 of its total potential returns per unit of risk. SCANDMEDICAL SOLDK 040 is currently generating about -0.02 per unit of volatility. If you would invest 91.00 in SCANDMEDICAL SOLDK 040 on August 28, 2024 and sell it today you would lose (8.00) from holding SCANDMEDICAL SOLDK 040 or give up 8.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. SCANDMEDICAL SOLDK 040
Performance |
| Timeline |
| Kaiser Aluminum |
| SCANDMEDICAL SOLDK 040 |
Kaiser Aluminum and SCANDMEDICAL SOLDK-040 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and SCANDMEDICAL SOLDK-040
The main advantage of trading using opposite Kaiser Aluminum and SCANDMEDICAL SOLDK-040 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040 will offset losses from the drop in SCANDMEDICAL SOLDK-040's long position.The idea behind Kaiser Aluminum and SCANDMEDICAL SOLDK 040 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.| SCANDMEDICAL SOLDK-040 vs. Superior Plus Corp | SCANDMEDICAL SOLDK-040 vs. NMI Holdings | SCANDMEDICAL SOLDK-040 vs. Origin Agritech | SCANDMEDICAL SOLDK-040 vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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