Correlation Between Kaiser Aluminum and Globalink Investment

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

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

Diversification Opportunities for Kaiser Aluminum and Globalink Investment

0.31

Correlation Coefficient

Kaiser Aluminum  Globalink Investment

Weak diversification

The 3 months correlation between Kaiser and Globalink is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Globalink Investment Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalink Investment Unit 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 Globalink Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalink Investment Unit has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Globalink Investment go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Globalink Investment

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.41 times more return on investment than Globalink Investment. However, Kaiser Aluminum is 1.41 times more volatile than Globalink Investment Unit. It trades about 0.02 of its potential returns per unit of risk. Globalink Investment Unit is currently generating about -0.09 per unit of risk. If you would invest  6,967  in Kaiser Aluminum on October 8, 2024 and sell it today you would earn a total of  56.00  from holding Kaiser Aluminum or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Kaiser Aluminum  vs.  Globalink Investment Unit

Kaiser Aluminum

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Kaiser Aluminum is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Globalink Investment Unit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globalink Investment Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward 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 Kaiser Aluminum and Globalink Investment

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

The idea behind Kaiser Aluminum and Globalink Investment Unit 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.