Correlation Between GoldMining and Kaiser Aluminum

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

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

Diversification Opportunities for GoldMining and Kaiser Aluminum

-0.81

Correlation Coefficient

GoldMining  Kaiser Aluminum

Pay attention - limited upside

The 3 months correlation between GoldMining and Kaiser is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between GoldMining and Kaiser Aluminum

Given the investment horizon of 90 days GoldMining is expected to under-perform the Kaiser Aluminum. In addition to that, GoldMining is 1.01 times more volatile than Kaiser Aluminum. It trades about -0.08 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.11 per unit of volatility. If you would invest  6,810  in Kaiser Aluminum on September 13, 2024 and sell it today you would earn a total of  1,107  from holding Kaiser Aluminum or generate 16.26% return on investment over 90 days.

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

GoldMining  vs.  Kaiser Aluminum

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining 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 fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kaiser Aluminum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Kaiser Aluminum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoldMining and Kaiser Aluminum

The main advantage of trading using opposite GoldMining and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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 GoldMining 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.