Correlation Between SPACE and Kaiser Aluminum

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

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

Diversification Opportunities for SPACE and Kaiser Aluminum

0.26

Correlation Coefficient

SPACE  Kaiser Aluminum

Modest diversification

The 3 months correlation between SPACE and Kaiser is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and SPACE 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 SPACE 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 SPACE i.e., SPACE and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between SPACE and Kaiser Aluminum

Assuming the 90 days horizon SPACE is expected to under-perform the Kaiser Aluminum. In addition to that, SPACE is 3.2 times more volatile than Kaiser Aluminum. It trades about -0.12 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.08 per unit of volatility. If you would invest  6,926  in Kaiser Aluminum on December 28, 2024 and sell it today you would lose (717.00) from holding Kaiser Aluminum or give up 10.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

SPACE  vs.  Kaiser Aluminum

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

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. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SPACE and Kaiser Aluminum

The main advantage of trading using opposite SPACE and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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 SPACE 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.