Correlation Between TRON and Kaiser

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

By analyzing existing cross correlation between TRON and Kaiser Aluminum 4625, you can compare the effects of market volatilities on TRON and Kaiser 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 TRON with a short position of Kaiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Kaiser.

Diversification Opportunities for TRON and Kaiser

-0.36

Correlation Coefficient

TRON  Kaiser

Very good diversification

The 3 months correlation between TRON and Kaiser is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Kaiser Aluminum 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 4625 and TRON 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 TRON are associated (or correlated) with Kaiser. 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 4625 has no effect on the direction of TRON i.e., TRON and Kaiser go up and down completely randomly.

Pair Corralation between TRON and Kaiser

Assuming the 90 days trading horizon TRON is expected to under-perform the Kaiser. In addition to that, TRON is 11.94 times more volatile than Kaiser Aluminum 4625. It trades about -0.02 of its total potential returns per unit of risk. Kaiser Aluminum 4625 is currently generating about 0.13 per unit of volatility. If you would invest  9,399  in Kaiser Aluminum 4625 on December 23, 2024 and sell it today you would earn a total of  226.00  from holding Kaiser Aluminum 4625 or generate 2.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

TRON  vs.  Kaiser Aluminum 4625

TRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TRON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kaiser Aluminum 4625

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum 4625 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kaiser is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TRON and Kaiser

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

The idea behind TRON and Kaiser Aluminum 4625 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.