Correlation Between Chemours and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Chemours and Century Aluminum 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 Chemours and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Century Aluminum, you can compare the effects of market volatilities on Chemours and Century Aluminum 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 Chemours with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Century Aluminum.
Diversification Opportunities for Chemours and Century Aluminum
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chemours and Century is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Chemours 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 Chemours Co are associated (or correlated) with Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Chemours i.e., Chemours and Century Aluminum go up and down completely randomly.
Pair Corralation between Chemours and Century Aluminum
Allowing for the 90-day total investment horizon Chemours is expected to generate 6.64 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, Chemours Co is 1.0 times less risky than Century Aluminum. It trades about 0.01 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 884.00 in Century Aluminum on January 18, 2024 and sell it today you would earn a total of 866.00 from holding Century Aluminum or generate 97.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Century Aluminum
Performance |
| Timeline |
| Chemours |
| Century Aluminum |
Chemours and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Century Aluminum
The main advantage of trading using opposite Chemours and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| Century Aluminum vs. China Hongqiao Group | Century Aluminum vs. Norsk Hydro ASA | Century Aluminum vs. Aquagold International | Century Aluminum vs. Thrivent High Yield |
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 CEOs Directory module to screen CEOs from public companies around the world.
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