Correlation Between Kaiser Aluminum and LQR House

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

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

Diversification Opportunities for Kaiser Aluminum and LQR House

0.14

Correlation Coefficient

Kaiser Aluminum  LQR House

Average diversification

The 3 months correlation between Kaiser and LQR is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and LQR House Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LQR House Common 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 LQR House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LQR House Common has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and LQR House go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and LQR House

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.25 times more return on investment than LQR House. However, Kaiser Aluminum is 3.97 times less risky than LQR House. It trades about 0.0 of its potential returns per unit of risk. LQR House Common is currently generating about -0.08 per unit of risk. If you would invest  8,154  in Kaiser Aluminum on October 7, 2024 and sell it today you would lose (1,131) from holding Kaiser Aluminum or give up 13.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.77%
Values	Daily Returns

Kaiser Aluminum  vs.  LQR House Common

Kaiser Aluminum

Risk-Adjusted Performance

0 of 100

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 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.

LQR House Common

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LQR House Common are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, LQR House reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and LQR House

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

The idea behind Kaiser Aluminum and LQR House Common 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.