Correlation Between Century Aluminum and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Scandinavian Tobacco 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 Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Century Aluminum and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Scandinavian Tobacco.
Diversification Opportunities for Century Aluminum and Scandinavian Tobacco
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and Scandinavian is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Century Aluminum i.e., Century Aluminum and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Century Aluminum and Scandinavian Tobacco
Given the investment horizon of 90 days Century Aluminum is expected to generate 2.08 times more return on investment than Scandinavian Tobacco. However, Century Aluminum is 2.08 times more volatile than Scandinavian Tobacco Group. It trades about 0.09 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.02 per unit of risk. If you would invest 875.00 in Century Aluminum on September 12, 2024 and sell it today you would earn a total of 1,341 from holding Century Aluminum or generate 153.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Century Aluminum |
| Scandinavian Tobacco |
Century Aluminum and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Scandinavian Tobacco
The main advantage of trading using opposite Century Aluminum and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. RLX Technology | Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Turning Point Brands |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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