Correlation Between Perceptive Capital and Kaiser Aluminum

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

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

Diversification Opportunities for Perceptive Capital and Kaiser Aluminum

-0.19

Correlation Coefficient

Perceptive Capital  Kaiser Aluminum

Good diversification

The 3 months correlation between Perceptive and Kaiser is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Perceptive Capital Solutions and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Perceptive Capital 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 Perceptive Capital Solutions are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Perceptive Capital i.e., Perceptive Capital and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Perceptive Capital and Kaiser Aluminum

Given the investment horizon of 90 days Perceptive Capital Solutions is expected to generate 0.09 times more return on investment than Kaiser Aluminum. However, Perceptive Capital Solutions is 10.7 times less risky than Kaiser Aluminum. It trades about 0.14 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.08 per unit of risk. If you would invest  1,013  in Perceptive Capital Solutions on December 30, 2024 and sell it today you would earn a total of  17.00  from holding Perceptive Capital Solutions or generate 1.68% return on investment over 90 days.

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

Perceptive Capital Solutions  vs.  Kaiser Aluminum

Perceptive Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perceptive Capital Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Perceptive Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Perceptive Capital and Kaiser Aluminum

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

The idea behind Perceptive Capital Solutions and Kaiser Aluminum 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..