Correlation Between Yakult Honsha and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Yakult Honsha and Kaiser Aluminum 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 Yakult Honsha and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yakult Honsha CoLtd and Kaiser Aluminum, you can compare the effects of market volatilities on Yakult Honsha and Kaiser Aluminum 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 Yakult Honsha with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yakult Honsha and Kaiser Aluminum.
Diversification Opportunities for Yakult Honsha and Kaiser Aluminum
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yakult and Kaiser is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Yakult Honsha CoLtd and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Yakult Honsha 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 Yakult Honsha CoLtd are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Yakult Honsha i.e., Yakult Honsha and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Yakult Honsha and Kaiser Aluminum
Assuming the 90 days horizon Yakult Honsha CoLtd is expected to under-perform the Kaiser Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Yakult Honsha CoLtd is 1.43 times less risky than Kaiser Aluminum. The stock trades about -0.04 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,691 in Kaiser Aluminum on September 12, 2024 and sell it today you would earn a total of 659.00 from holding Kaiser Aluminum or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yakult Honsha CoLtd vs. Kaiser Aluminum
Performance |
| Timeline |
| Yakult Honsha CoLtd |
| Kaiser Aluminum |
Yakult Honsha and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yakult Honsha and Kaiser Aluminum
The main advantage of trading using opposite Yakult Honsha and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yakult Honsha position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Yakult Honsha vs. Canon Marketing Japan | Yakult Honsha vs. SIDETRADE EO 1 | Yakult Honsha vs. MARKET VECTR RETAIL | Yakult Honsha vs. Carsales |
| Kaiser Aluminum vs. Tencent Music Entertainment | Kaiser Aluminum vs. Vastned Retail NV | Kaiser Aluminum vs. MARKET VECTR RETAIL | Kaiser Aluminum vs. PLAYSTUDIOS A DL 0001 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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