Correlation Between Century Aluminum and Premium Nickel
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Premium Nickel 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 Premium Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Premium Nickel Resources, you can compare the effects of market volatilities on Century Aluminum and Premium Nickel 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 Premium Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Premium Nickel.
Diversification Opportunities for Century Aluminum and Premium Nickel
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and Premium is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel Resources 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 Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Century Aluminum i.e., Century Aluminum and Premium Nickel go up and down completely randomly.
Pair Corralation between Century Aluminum and Premium Nickel
Given the investment horizon of 90 days Century Aluminum is expected to generate 0.8 times more return on investment than Premium Nickel. However, Century Aluminum is 1.25 times less risky than Premium Nickel. It trades about 0.11 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.05 per unit of risk. If you would invest 807.00 in Century Aluminum on September 14, 2024 and sell it today you would earn a total of 1,280 from holding Century Aluminum or generate 158.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Century Aluminum vs. Premium Nickel Resources
Performance |
| Timeline |
| Century Aluminum |
| Premium Nickel Resources |
Century Aluminum and Premium Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Premium Nickel
The main advantage of trading using opposite Century Aluminum and Premium Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Premium Nickel 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 Premium Nickel will offset losses from the drop in Premium Nickel's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Premium Nickel vs. East Africa Metals | Premium Nickel vs. Franklin Credit Management | Premium Nickel vs. Xiabuxiabu Catering Management | Premium Nickel vs. Century Aluminum |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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