Correlation Between Kaiser Aluminum and Mimasu Semiconductor

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

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

Diversification Opportunities for Kaiser Aluminum and Mimasu Semiconductor

0.34

Correlation Coefficient

Kaiser Aluminum  Mimasu Semiconductor

Weak diversification

The 3 months correlation between Kaiser and Mimasu is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Mimasu Semiconductor Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mimasu Semiconductor 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 Mimasu Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mimasu Semiconductor has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Mimasu Semiconductor go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Mimasu Semiconductor

Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 0.72 times more return on investment than Mimasu Semiconductor. However, Kaiser Aluminum is 1.39 times less risky than Mimasu Semiconductor. It trades about 0.27 of its potential returns per unit of risk. Mimasu Semiconductor Industry is currently generating about 0.08 per unit of risk. If you would invest  6,391  in Kaiser Aluminum on February 25, 2024 and sell it today you would earn a total of  2,409  from holding Kaiser Aluminum or generate 37.69% return on investment over 90 days.

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

Kaiser Aluminum  vs.  Mimasu Semiconductor Industry

Kaiser Aluminum

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kaiser Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

Mimasu Semiconductor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mimasu Semiconductor Industry are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Mimasu Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and Mimasu Semiconductor

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

The idea behind Kaiser Aluminum and Mimasu Semiconductor Industry 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 Global Correlations module to find global opportunities by holding instruments from different markets.