Correlation Between Century Aluminum and Electrovaya Common

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

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

Diversification Opportunities for Century Aluminum and Electrovaya Common

0.55

Correlation Coefficient

Century Aluminum  Electrovaya Common

Very weak diversification

The 3 months correlation between Century and Electrovaya is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Century 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 Century Aluminum are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Century Aluminum i.e., Century Aluminum and Electrovaya Common go up and down completely randomly.

Pair Corralation between Century Aluminum and Electrovaya Common

Given the investment horizon of 90 days Century Aluminum is expected to under-perform the Electrovaya Common. But the stock apears to be less risky and, when comparing its historical volatility, Century Aluminum is 1.89 times less risky than Electrovaya Common. The stock trades about -0.34 of its potential returns per unit of risk. The Electrovaya Common Shares is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  272.00  in Electrovaya Common Shares on September 25, 2024 and sell it today you would lose (49.00) from holding Electrovaya Common Shares or give up 18.01% of portfolio value over 90 days.

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

Century Aluminum  vs.  Electrovaya Common Shares

Century Aluminum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Century Aluminum showed solid returns over the last few months and may actually be approaching a breakup point.

Electrovaya Common Shares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Century Aluminum and Electrovaya Common

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

The idea behind Century Aluminum and Electrovaya Common Shares 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 Stocks Directory module to find actively traded stocks across global markets.