Correlation Between Kaiser Aluminum and Star Diamond

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

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

Diversification Opportunities for Kaiser Aluminum and Star Diamond

0.0

Correlation Coefficient

Kaiser Aluminum  Star Diamond

Pay attention - limited upside

The 3 months correlation between Kaiser and Star is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Star Diamond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Diamond 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 Star Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Diamond has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Star Diamond go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Star Diamond

Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 0.31 times more return on investment than Star Diamond. However, Kaiser Aluminum is 3.27 times less risky than Star Diamond. It trades about 0.39 of its potential returns per unit of risk. Star Diamond is currently generating about 0.05 per unit of risk. If you would invest  4,599  in Kaiser Aluminum on April 22, 2025 and sell it today you would earn a total of  3,151  from holding Kaiser Aluminum or generate 68.51% return on investment over 90 days.

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

Kaiser Aluminum  vs.  Star Diamond

Kaiser Aluminum

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 30 (%) 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.

Star Diamond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Star Diamond are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Star Diamond reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and Star Diamond

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

The idea behind Kaiser Aluminum and Star Diamond 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.