Correlation Between Kaiser Aluminum and Medicus Pharma

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

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

Diversification Opportunities for Kaiser Aluminum and Medicus Pharma

0.21

Correlation Coefficient

Kaiser Aluminum  Medicus Pharma

Modest diversification

The 3 months correlation between Kaiser and Medicus is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Medicus Pharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicus Pharma 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 Medicus Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicus Pharma has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Medicus Pharma go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Medicus Pharma

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 258.79 times less return on investment than Medicus Pharma. But when comparing it to its historical volatility, Kaiser Aluminum is 9.25 times less risky than Medicus Pharma. It trades about 0.0 of its potential returns per unit of risk. Medicus Pharma Ltd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Medicus Pharma Ltd on October 10, 2024 and sell it today you would earn a total of  122.00  from holding Medicus Pharma Ltd or generate 68.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	11.72%
Values	Daily Returns

Kaiser Aluminum  vs.  Medicus Pharma Ltd

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.

Medicus Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicus Pharma Ltd 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kaiser Aluminum and Medicus Pharma

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

The idea behind Kaiser Aluminum and Medicus Pharma Ltd 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.