Correlation Between Brockhaus Capital and Kaiser Aluminum

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

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

Diversification Opportunities for Brockhaus Capital and Kaiser Aluminum

0.76

Correlation Coefficient

Brockhaus Capital  Kaiser Aluminum

Poor diversification

The 3 months correlation between Brockhaus and Kaiser is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Kaiser Aluminum

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Kaiser Aluminum. In addition to that, Brockhaus Capital is 1.71 times more volatile than Kaiser Aluminum. It trades about -0.11 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.06 per unit of volatility. If you would invest  6,525  in Kaiser Aluminum on December 30, 2024 and sell it today you would lose (525.00) from holding Kaiser Aluminum or give up 8.05% of portfolio value over 90 days.

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

Brockhaus Capital Management  vs.  Kaiser Aluminum

Brockhaus Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kaiser Aluminum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaiser Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Brockhaus Capital and Kaiser Aluminum

The main advantage of trading using opposite Brockhaus Capital and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.