Correlation Between Century Aluminum and Maanshan Iron
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Maanshan Iron 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 Maanshan Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Maanshan Iron Steel, you can compare the effects of market volatilities on Century Aluminum and Maanshan Iron 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 Maanshan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Maanshan Iron.
Diversification Opportunities for Century Aluminum and Maanshan Iron
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Maanshan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Maanshan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maanshan Iron Steel 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 Maanshan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maanshan Iron Steel has no effect on the direction of Century Aluminum i.e., Century Aluminum and Maanshan Iron go up and down completely randomly.
Pair Corralation between Century Aluminum and Maanshan Iron
Given the investment horizon of 90 days Century Aluminum is expected to generate 1.07 times more return on investment than Maanshan Iron. However, Century Aluminum is 1.07 times more volatile than Maanshan Iron Steel. It trades about 0.07 of its potential returns per unit of risk. Maanshan Iron Steel is currently generating about 0.0 per unit of risk. If you would invest 818.00 in Century Aluminum on August 26, 2024 and sell it today you would earn a total of 1,431 from holding Century Aluminum or generate 174.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Maanshan Iron Steel
Performance |
| Timeline |
| Century Aluminum |
| Maanshan Iron Steel |
Century Aluminum and Maanshan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Maanshan Iron
The main advantage of trading using opposite Century Aluminum and Maanshan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Maanshan Iron 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 Maanshan Iron will offset losses from the drop in Maanshan Iron's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. Mesabi Trust | Maanshan Iron vs. Universal Stainless Alloy | Maanshan Iron vs. POSCO Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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