Correlation Between Kaiser Aluminum and XIAOMI

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

By analyzing existing cross correlation between Kaiser Aluminum and XIAOMI 3375 29 APR 30, you can compare the effects of market volatilities on Kaiser Aluminum and XIAOMI 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 XIAOMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and XIAOMI.

Diversification Opportunities for Kaiser Aluminum and XIAOMI

0.49

Correlation Coefficient

Kaiser Aluminum  XIAOMI

Very weak diversification

The 3 months correlation between Kaiser and XIAOMI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and XIAOMI 3375 29 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAOMI 3375 29 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 XIAOMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAOMI 3375 29 has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and XIAOMI go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and XIAOMI

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.55 times more return on investment than XIAOMI. However, Kaiser Aluminum is 1.55 times more volatile than XIAOMI 3375 29 APR 30. It trades about 0.04 of its potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about 0.01 per unit of risk. If you would invest  5,724  in Kaiser Aluminum on October 1, 2024 and sell it today you would earn a total of  1,208  from holding Kaiser Aluminum or generate 21.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	18.69%
Values	Daily Returns

Kaiser Aluminum  vs.  XIAOMI 3375 29 APR 30

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.

XIAOMI 3375 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XIAOMI 3375 29 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for XIAOMI 3375 29 APR 30 investors.

Pair Trading with Kaiser Aluminum and XIAOMI

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

The idea behind Kaiser Aluminum and XIAOMI 3375 29 APR 30 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.