Correlation Between Century Aluminum and Aris Mining
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Aris Mining 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 Aris Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Aris Mining, you can compare the effects of market volatilities on Century Aluminum and Aris Mining 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 Aris Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Aris Mining.
Diversification Opportunities for Century Aluminum and Aris Mining
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Aris is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining 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 Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Century Aluminum i.e., Century Aluminum and Aris Mining go up and down completely randomly.
Pair Corralation between Century Aluminum and Aris Mining
Given the investment horizon of 90 days Century Aluminum is expected to under-perform the Aris Mining. But the stock apears to be less risky and, when comparing its historical volatility, Century Aluminum is 1.23 times less risky than Aris Mining. The stock trades about -0.29 of its potential returns per unit of risk. The Aris Mining is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 387.00 in Aris Mining on October 9, 2024 and sell it today you would lose (25.00) from holding Aris Mining or give up 6.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Aris Mining
Performance |
| Timeline |
| Century Aluminum |
| Aris Mining |
Century Aluminum and Aris Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Aris Mining
The main advantage of trading using opposite Century Aluminum and Aris Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Aris Mining 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 Aris Mining will offset losses from the drop in Aris Mining's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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