Correlation Between Kaiser Aluminum and Corporate Travel

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

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

Diversification Opportunities for Kaiser Aluminum and Corporate Travel

0.62

Correlation Coefficient

Kaiser Aluminum  Corporate Travel

Poor diversification

The 3 months correlation between Kaiser and Corporate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Corporate Travel go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Corporate Travel

Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the Corporate Travel. But the stock apears to be less risky and, when comparing its historical volatility, Kaiser Aluminum is 1.45 times less risky than Corporate Travel. The stock trades about -0.5 of its potential returns per unit of risk. The Corporate Travel Management is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  845.00  in Corporate Travel Management on September 25, 2024 and sell it today you would lose (80.00) from holding Corporate Travel Management or give up 9.47% of portfolio value over 90 days.

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

Kaiser Aluminum  vs.  Corporate Travel Management

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. Despite nearly fragile basic indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Corporate Travel Man

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kaiser Aluminum and Corporate Travel

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

The idea behind Kaiser Aluminum and Corporate Travel Management 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.