Correlation Between Kaiser Aluminum and AMAG Austria

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

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

Diversification Opportunities for Kaiser Aluminum and AMAG Austria

-0.39

Correlation Coefficient

Kaiser Aluminum  AMAG Austria

Very good diversification

The 3 months correlation between Kaiser and AMAG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall 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 AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and AMAG Austria go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and AMAG Austria

Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.87 times more return on investment than AMAG Austria. However, Kaiser Aluminum is 1.87 times more volatile than AMAG Austria Metall. It trades about 0.34 of its potential returns per unit of risk. AMAG Austria Metall is currently generating about -0.05 per unit of risk. If you would invest  5,132  in Kaiser Aluminum on April 24, 2025 and sell it today you would earn a total of  2,668  from holding Kaiser Aluminum or generate 51.99% return on investment over 90 days.

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

Kaiser Aluminum  vs.  AMAG Austria Metall

Kaiser Aluminum

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 26 (%) 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.

AMAG Austria Metall

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMAG Austria Metall has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AMAG Austria is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaiser Aluminum and AMAG Austria

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

The idea behind Kaiser Aluminum and AMAG Austria Metall 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.