Correlation Between Kaiser Aluminum and CVW CleanTech

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Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and CVW CleanTech 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 CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and CVW CleanTech, you can compare the effects of market volatilities on Kaiser Aluminum and CVW CleanTech 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 CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and CVW CleanTech.

Diversification Opportunities for Kaiser Aluminum and CVW CleanTech

KaiserCVWDiversified AwayKaiserCVWDiversified Away100%
-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Kaiser and CVW is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and CVW CleanTech go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and CVW CleanTech

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.93 times more return on investment than CVW CleanTech. However, Kaiser Aluminum is 1.07 times less risky than CVW CleanTech. It trades about 0.05 of its potential returns per unit of risk. CVW CleanTech is currently generating about -0.04 per unit of risk. If you would invest  6,990  in Kaiser Aluminum on October 21, 2024 and sell it today you would earn a total of  378.00  from holding Kaiser Aluminum or generate 5.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kaiser Aluminum  vs.  CVW CleanTech

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -505101520
JavaScript chart by amCharts 3.21.15KALU CVWFF
       Timeline  
Kaiser Aluminum 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan6570758085
CVW CleanTech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.520.540.560.580.60.620.64

Kaiser Aluminum and CVW CleanTech Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.97-5.97-3.97-1.97-0.011.933.976.08.0310.07 0.020.030.040.050.06
JavaScript chart by amCharts 3.21.15KALU CVWFF
       Returns  

Pair Trading with Kaiser Aluminum and CVW CleanTech

The main advantage of trading using opposite Kaiser Aluminum and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech's long position.
The idea behind Kaiser Aluminum and CVW CleanTech 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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