Correlation Between Kaiser Aluminum and International Tower

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

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

Diversification Opportunities for Kaiser Aluminum and International Tower

-0.15

Correlation Coefficient

Kaiser Aluminum  International Tower

Good diversification

The 3 months correlation between Kaiser and International is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill 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 International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and International Tower go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and International Tower

Given the investment horizon of 90 days Kaiser Aluminum is expected to under-perform the International Tower. But the stock apears to be less risky and, when comparing its historical volatility, Kaiser Aluminum is 2.17 times less risky than International Tower. The stock trades about -0.11 of its potential returns per unit of risk. The International Tower Hill is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  46.00  in International Tower Hill on November 28, 2024 and sell it today you would earn a total of  1.50  from holding International Tower Hill or generate 3.26% return on investment over 90 days.

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

Kaiser Aluminum  vs.  International Tower Hill

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 latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

International Tower Hill

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Tower Hill are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, International Tower may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Kaiser Aluminum and International Tower

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

The idea behind Kaiser Aluminum and International Tower Hill 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.