Correlation Between Kaiser Aluminum and COPLAND ROAD

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

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

Diversification Opportunities for Kaiser Aluminum and COPLAND ROAD

-0.42

Correlation Coefficient

Kaiser Aluminum  COPLAND ROAD

Very good diversification

The 3 months correlation between Kaiser and COPLAND is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and COPLAND ROAD CAPITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPLAND ROAD CAPITAL 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 COPLAND ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPLAND ROAD CAPITAL has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and COPLAND ROAD go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and COPLAND ROAD

Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.11 times more return on investment than COPLAND ROAD. However, Kaiser Aluminum is 1.11 times more volatile than COPLAND ROAD CAPITAL. It trades about 0.05 of its potential returns per unit of risk. COPLAND ROAD CAPITAL is currently generating about 0.01 per unit of risk. If you would invest  6,223  in Kaiser Aluminum on September 25, 2024 and sell it today you would earn a total of  427.00  from holding Kaiser Aluminum or generate 6.86% return on investment over 90 days.

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

Kaiser Aluminum  vs.  COPLAND ROAD CAPITAL

Kaiser Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

COPLAND ROAD CAPITAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kaiser Aluminum and COPLAND ROAD

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

The idea behind Kaiser Aluminum and COPLAND ROAD CAPITAL 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.