Correlation Between Kaiser Aluminum and VIRGIN WINES

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

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

Diversification Opportunities for Kaiser Aluminum and VIRGIN WINES

0.0

Correlation Coefficient

Kaiser Aluminum  VIRGIN WINES

Pay attention - limited upside

The 3 months correlation between Kaiser and VIRGIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and VIRGIN WINES UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRGIN WINES UK 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 VIRGIN WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRGIN WINES UK has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and VIRGIN WINES go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and VIRGIN WINES

If you would invest  6,421  in Kaiser Aluminum on September 3, 2024 and sell it today you would earn a total of  1,079  from holding Kaiser Aluminum or generate 16.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kaiser Aluminum  vs.  VIRGIN WINES UK

Kaiser Aluminum

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 7 (%) 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.

VIRGIN WINES UK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIRGIN WINES UK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VIRGIN WINES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaiser Aluminum and VIRGIN WINES

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

The idea behind Kaiser Aluminum and VIRGIN WINES UK 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 Transaction History module to view history of all your transactions and understand their impact on performance.