Correlation Between Sligro Food and Kaiser Aluminum

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

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

Diversification Opportunities for Sligro Food and Kaiser Aluminum

-0.03

Correlation Coefficient

Sligro Food  Kaiser Aluminum

Good diversification

The 3 months correlation between Sligro and Kaiser is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Sligro Food 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 Sligro Food Group 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 Sligro Food i.e., Sligro Food and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Sligro Food and Kaiser Aluminum

Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Kaiser Aluminum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 2.07 times less risky than Kaiser Aluminum. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,954  in Kaiser Aluminum on October 21, 2024 and sell it today you would lose (586.00) from holding Kaiser Aluminum or give up 7.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.35%
Values	Daily Returns

Sligro Food Group  vs.  Kaiser Aluminum

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kaiser Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sligro Food and Kaiser Aluminum

The main advantage of trading using opposite Sligro Food and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food 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 Sligro Food Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.