Correlation Between Zedge and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Zedge 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 Zedge and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zedge Inc and Kaiser Aluminum, you can compare the effects of market volatilities on Zedge 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 Zedge with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zedge and Kaiser Aluminum.
Diversification Opportunities for Zedge and Kaiser Aluminum
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zedge and Kaiser is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Zedge 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 Zedge Inc 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 Zedge i.e., Zedge and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Zedge and Kaiser Aluminum
Given the investment horizon of 90 days Zedge Inc is expected to generate 1.77 times more return on investment than Kaiser Aluminum. However, Zedge is 1.77 times more volatile than Kaiser Aluminum. It trades about 0.02 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.03 per unit of risk. If you would invest 263.00 in Zedge Inc on August 24, 2024 and sell it today you would lose (8.00) from holding Zedge Inc or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zedge Inc vs. Kaiser Aluminum
Performance |
| Timeline |
| Zedge Inc |
| Kaiser Aluminum |
Zedge and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zedge and Kaiser Aluminum
The main advantage of trading using opposite Zedge and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge 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.The idea behind Zedge Inc and Kaiser Aluminum 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.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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