Correlation Between Century Aluminum and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Aluminumof China 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 Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Aluminum of, you can compare the effects of market volatilities on Century Aluminum and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Aluminumof China.
Diversification Opportunities for Century Aluminum and Aluminumof China
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Century and Aluminumof is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Century Aluminum i.e., Century Aluminum and Aluminumof China go up and down completely randomly.
Pair Corralation between Century Aluminum and Aluminumof China
Assuming the 90 days horizon Century Aluminum is expected to generate 1.0 times more return on investment than Aluminumof China. However, Century Aluminum is 1.0 times more volatile than Aluminum of. It trades about 0.13 of its potential returns per unit of risk. Aluminum of is currently generating about 0.06 per unit of risk. If you would invest 1,267 in Century Aluminum on September 23, 2024 and sell it today you would earn a total of 453.00 from holding Century Aluminum or generate 35.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Century Aluminum vs. Aluminum of
Performance |
Timeline |
Century Aluminum |
Aluminumof China |
Century Aluminum and Aluminumof China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Century Aluminum and Aluminumof China
The main advantage of trading using opposite Century Aluminum and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.Century Aluminum vs. Norsk Hydro ASA | Century Aluminum vs. Norsk Hydro ASA | Century Aluminum vs. Aluminum of | Century Aluminum vs. Alcoa Corp |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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