Correlation Between GREENX METALS and Kaiser Aluminum

Can any of the company-specific risk be diversified away by investing in both GREENX METALS 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 GREENX METALS and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GREENX METALS LTD and Kaiser Aluminum, you can compare the effects of market volatilities on GREENX METALS 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 GREENX METALS with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENX METALS and Kaiser Aluminum.

Diversification Opportunities for GREENX METALS and Kaiser Aluminum

-0.08

Correlation Coefficient

GREENX METALS  Kaiser Aluminum

Good diversification

The 3 months correlation between GREENX and Kaiser is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding GREENX METALS LTD and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and GREENX METALS 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 GREENX METALS LTD 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 GREENX METALS i.e., GREENX METALS and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between GREENX METALS and Kaiser Aluminum

Assuming the 90 days trading horizon GREENX METALS LTD is expected to under-perform the Kaiser Aluminum. In addition to that, GREENX METALS is 2.0 times more volatile than Kaiser Aluminum. It trades about -0.06 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.12 per unit of volatility. If you would invest  7,900  in Kaiser Aluminum on September 12, 2024 and sell it today you would lose (550.00) from holding Kaiser Aluminum or give up 6.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GREENX METALS LTD  vs.  Kaiser Aluminum

GREENX METALS LTD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GREENX METALS LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GREENX METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Kaiser Aluminum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 9 (%) 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.

Pair Trading with GREENX METALS and Kaiser Aluminum

The main advantage of trading using opposite GREENX METALS and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENX METALS 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 GREENX METALS LTD 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.