Correlation Between Century Aluminum and 00206RJY9

Can any of the company-specific risk be diversified away by investing in both Century Aluminum and 00206RJY9 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 00206RJY9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Century Aluminum and ATT INC, you can compare the effects of market volatilities on Century Aluminum and 00206RJY9 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 00206RJY9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and 00206RJY9.

Diversification Opportunities for Century Aluminum and 00206RJY9

-0.56

Correlation Coefficient

Century Aluminum  00206RJY9

Excellent diversification

The 3 months correlation between Century and 00206RJY9 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and ATT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 00206RJY9 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 00206RJY9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 00206RJY9 has no effect on the direction of Century Aluminum i.e., Century Aluminum and 00206RJY9 go up and down completely randomly.

Pair Corralation between Century Aluminum and 00206RJY9

Given the investment horizon of 90 days Century Aluminum is expected to generate 4.16 times more return on investment than 00206RJY9. However, Century Aluminum is 4.16 times more volatile than ATT INC. It trades about 0.21 of its potential returns per unit of risk. ATT INC is currently generating about -0.15 per unit of risk. If you would invest  1,364  in Century Aluminum on September 13, 2024 and sell it today you would earn a total of  796.00  from holding Century Aluminum or generate 58.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Century Aluminum  vs.  ATT INC

Century Aluminum

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Century Aluminum showed solid returns over the last few months and may actually be approaching a breakup point.

00206RJY9

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ATT INC investors.

Pair Trading with Century Aluminum and 00206RJY9

The main advantage of trading using opposite Century Aluminum and 00206RJY9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, 00206RJY9 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 00206RJY9 will offset losses from the drop in 00206RJY9's long position.

The idea behind Century Aluminum and ATT INC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.