Correlation Between Kaiser Aluminum and MetaVia

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

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

Diversification Opportunities for Kaiser Aluminum and MetaVia

0.49

Correlation Coefficient

Kaiser Aluminum  MetaVia

Very weak diversification

The 3 months correlation between Kaiser and MetaVia is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and MetaVia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaVia 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 MetaVia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaVia has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and MetaVia go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and MetaVia

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.43 times more return on investment than MetaVia. However, Kaiser Aluminum is 2.3 times less risky than MetaVia. It trades about 0.01 of its potential returns per unit of risk. MetaVia is currently generating about 0.0 per unit of risk. If you would invest  6,935  in Kaiser Aluminum on December 21, 2024 and sell it today you would lose (21.00) from holding Kaiser Aluminum or give up 0.3% of portfolio value over 90 days.

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

Kaiser Aluminum  vs.  MetaVia

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 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.

MetaVia

Risk-Adjusted Performance

Very Weak

Over the last 90 days MetaVia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MetaVia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kaiser Aluminum and MetaVia

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

The idea behind Kaiser Aluminum and MetaVia 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.