Correlation Between Kaiser Aluminum and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Kaiser Aluminum and Centessa Pharmaceuticals

0.32

Correlation Coefficient

Kaiser Aluminum  Centessa Pharmaceuticals

Weak diversification

The 3 months correlation between Kaiser and Centessa is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals 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 Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Centessa Pharmaceuticals

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.56 times more return on investment than Centessa Pharmaceuticals. However, Kaiser Aluminum is 1.8 times less risky than Centessa Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about -0.08 per unit of risk. If you would invest  7,000  in Kaiser Aluminum on December 2, 2024 and sell it today you would earn a total of  76.00  from holding Kaiser Aluminum or generate 1.09% return on investment over 90 days.

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

Kaiser Aluminum  vs.  Centessa Pharmaceuticals PLC

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 weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Centessa Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centessa Pharmaceuticals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centessa Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kaiser Aluminum and Centessa Pharmaceuticals

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

The idea behind Kaiser Aluminum and Centessa Pharmaceuticals PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.