Correlation Between Kaiser Aluminum and Catheter Precision

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

By analyzing existing cross correlation between Kaiser Aluminum and Catheter Precision, you can compare the effects of market volatilities on Kaiser Aluminum and Catheter Precision 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 Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Catheter Precision.

Diversification Opportunities for Kaiser Aluminum and Catheter Precision

-0.1

Correlation Coefficient

Kaiser Aluminum  Catheter Precision

Good diversification

The 3 months correlation between Kaiser and Catheter is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Catheter Precision go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Catheter Precision

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.27 times less return on investment than Catheter Precision. But when comparing it to its historical volatility, Kaiser Aluminum is 5.98 times less risky than Catheter Precision. It trades about 0.13 of its potential returns per unit of risk. Catheter Precision is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Catheter Precision on September 4, 2024 and sell it today you would lose (10.00) from holding Catheter Precision or give up 20.83% 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.  Catheter Precision

Kaiser Aluminum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Kaiser Aluminum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Catheter Precision

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catheter Precision are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Catheter Precision disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and Catheter Precision

The main advantage of trading using opposite Kaiser Aluminum and Catheter Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Catheter Precision 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 Catheter Precision will offset losses from the drop in Catheter Precision's long position.

The idea behind Kaiser Aluminum and Catheter Precision 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.