Correlation Between Kaiser Aluminum and Constellium

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

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

Diversification Opportunities for Kaiser Aluminum and Constellium

-0.32

Correlation Coefficient

Kaiser Aluminum  Constellium

Very good diversification

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

Pair Corralation between Kaiser Aluminum and Constellium

Given the investment horizon of 90 days Kaiser Aluminum is expected to under-perform the Constellium. But the stock apears to be less risky and, when comparing its historical volatility, Kaiser Aluminum is 1.61 times less risky than Constellium. The stock trades about -0.08 of its potential returns per unit of risk. The Constellium Nv is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  997.00  in Constellium Nv on December 30, 2024 and sell it today you would earn a total of  33.00  from holding Constellium Nv or generate 3.31% return on investment over 90 days.

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

Kaiser Aluminum  vs.  Constellium Nv

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.

Constellium Nv

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Constellium Nv are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Constellium may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kaiser Aluminum and Constellium

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

The idea behind Kaiser Aluminum and Constellium Nv 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.