Correlation Between Kaiser Aluminum and BHCCN

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

By analyzing existing cross correlation between Kaiser Aluminum and BHCCN 11 30 SEP 28, you can compare the effects of market volatilities on Kaiser Aluminum and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and BHCCN.

Diversification Opportunities for Kaiser Aluminum and BHCCN

0.48

Correlation Coefficient

Kaiser Aluminum  BHCCN

Very weak diversification

The 3 months correlation between Kaiser and BHCCN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and BHCCN 11 30 SEP 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 11 30 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 11 30 has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and BHCCN go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and BHCCN

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.31 times more return on investment than BHCCN. However, Kaiser Aluminum is 3.25 times less risky than BHCCN. It trades about -0.47 of its potential returns per unit of risk. BHCCN 11 30 SEP 28 is currently generating about -0.28 per unit of risk. If you would invest  8,100  in Kaiser Aluminum on October 9, 2024 and sell it today you would lose (1,075) from holding Kaiser Aluminum or give up 13.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.47%
Values	Daily Returns

Kaiser Aluminum  vs.  BHCCN 11 30 SEP 28

Kaiser Aluminum

Risk-Adjusted Performance

0 of 100

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.

BHCCN 11 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 11 30 SEP 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat 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 BHCCN 11 30 SEP 28 investors.

Pair Trading with Kaiser Aluminum and BHCCN

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

The idea behind Kaiser Aluminum and BHCCN 11 30 SEP 28 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..