Correlation Between Century Aluminum and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Hitachi Construction 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 Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Hitachi Construction Machinery, you can compare the effects of market volatilities on Century Aluminum and Hitachi Construction 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Hitachi Construction.
Diversification Opportunities for Century Aluminum and Hitachi Construction
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Hitachi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of Century Aluminum i.e., Century Aluminum and Hitachi Construction go up and down completely randomly.
Pair Corralation between Century Aluminum and Hitachi Construction
Assuming the 90 days horizon Century Aluminum is expected to generate 2.82 times more return on investment than Hitachi Construction. However, Century Aluminum is 2.82 times more volatile than Hitachi Construction Machinery. It trades about 0.28 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.17 per unit of risk. If you would invest 1,565 in Century Aluminum on September 5, 2024 and sell it today you would earn a total of 575.00 from holding Century Aluminum or generate 36.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Century Aluminum vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Century Aluminum |
| Hitachi Construction |
Century Aluminum and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Hitachi Construction
The main advantage of trading using opposite Century Aluminum and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| Century Aluminum vs. Hitachi Construction Machinery | Century Aluminum vs. DELTA AIR LINES | Century Aluminum vs. WIZZ AIR HLDGUNSPADR4 | Century Aluminum vs. WIMFARM SA EO |
| Hitachi Construction vs. Richardson Electronics | Hitachi Construction vs. STMICROELECTRONICS | Hitachi Construction vs. Burlington Stores | Hitachi Construction vs. National Retail Properties |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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