Correlation Between FIRST SHIP and Kaiser Aluminum

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

By analyzing existing cross correlation between FIRST SHIP LEASE and Kaiser Aluminum, you can compare the effects of market volatilities on FIRST SHIP and Kaiser Aluminum 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 FIRST SHIP with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and Kaiser Aluminum.

Diversification Opportunities for FIRST SHIP and Kaiser Aluminum

0.04

Correlation Coefficient

FIRST SHIP  Kaiser Aluminum

Significant diversification

The 3 months correlation between FIRST and Kaiser is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and FIRST SHIP 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 FIRST SHIP LEASE are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of FIRST SHIP i.e., FIRST SHIP and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between FIRST SHIP and Kaiser Aluminum

Assuming the 90 days horizon FIRST SHIP is expected to generate 6.52 times less return on investment than Kaiser Aluminum. In addition to that, FIRST SHIP is 1.42 times more volatile than Kaiser Aluminum. It trades about 0.04 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.37 per unit of volatility. If you would invest  4,599  in Kaiser Aluminum on April 20, 2025 and sell it today you would earn a total of  2,951  from holding Kaiser Aluminum or generate 64.17% return on investment over 90 days.

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

FIRST SHIP LEASE  vs.  Kaiser Aluminum

FIRST SHIP LEASE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SHIP LEASE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SHIP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Kaiser Aluminum

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Kaiser Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIRST SHIP and Kaiser Aluminum

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

The idea behind FIRST SHIP LEASE and Kaiser Aluminum 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.