Correlation Between Century Aluminum and Alumina Limited
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Alumina Limited 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 Alumina Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Alumina Limited PK, you can compare the effects of market volatilities on Century Aluminum and Alumina Limited 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 Alumina Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Alumina Limited.
Diversification Opportunities for Century Aluminum and Alumina Limited
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and Alumina is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Alumina Limited PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumina Limited PK 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 Alumina Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumina Limited PK has no effect on the direction of Century Aluminum i.e., Century Aluminum and Alumina Limited go up and down completely randomly.
Pair Corralation between Century Aluminum and Alumina Limited
If you would invest 1,516 in Century Aluminum on August 23, 2024 and sell it today you would earn a total of 745.00 from holding Century Aluminum or generate 49.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.56% |
| Values | Daily Returns |
Century Aluminum vs. Alumina Limited PK
Performance |
| Timeline |
| Century Aluminum |
| Alumina Limited PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Century Aluminum and Alumina Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Alumina Limited
The main advantage of trading using opposite Century Aluminum and Alumina Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Alumina Limited 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 Alumina Limited will offset losses from the drop in Alumina Limited's long position.| Century Aluminum vs. Small Cap Core | Century Aluminum vs. Morningstar Unconstrained Allocation | Century Aluminum vs. Mutual Of America | Century Aluminum vs. Ep Emerging Markets |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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