Correlation Between Kaiser Aluminum and Celanese
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Celanese 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 Celanese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Celanese, you can compare the effects of market volatilities on Kaiser Aluminum and Celanese 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 Celanese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Celanese.
Diversification Opportunities for Kaiser Aluminum and Celanese
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and Celanese is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese 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 Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Celanese go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Celanese
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.03 times more return on investment than Celanese. However, Kaiser Aluminum is 1.03 times more volatile than Celanese. It trades about 0.32 of its potential returns per unit of risk. Celanese is currently generating about -0.11 per unit of risk. If you would invest 7,923 in Kaiser Aluminum on January 19, 2024 and sell it today you would earn a total of 1,073 from holding Kaiser Aluminum or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Celanese
Performance |
| Timeline |
| Kaiser Aluminum |
| Celanese |
Kaiser Aluminum and Celanese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Celanese
The main advantage of trading using opposite Kaiser Aluminum and Celanese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Celanese 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 Celanese will offset losses from the drop in Celanese's long position.| Kaiser Aluminum vs. Immutep Ltd ADR | Kaiser Aluminum vs. Home Federal Bancorp | Kaiser Aluminum vs. Anheuser Busch Inbev | Kaiser Aluminum vs. Marker Therapeutics |
| Celanese vs. Tronox Holdings PLC | Celanese vs. Green Plains Renewable | Celanese vs. Lsb Industries | Celanese vs. Valhi Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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