Correlation Between Celanese and Aluminum Corp

Can any of the company-specific risk be diversified away by investing in both Celanese and Aluminum Corp 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 Celanese and Aluminum Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Celanese and Aluminum Corp, you can compare the effects of market volatilities on Celanese and Aluminum Corp 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 Celanese with a short position of Aluminum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Aluminum Corp.

Diversification Opportunities for Celanese and Aluminum Corp

0.0

Correlation Coefficient

Celanese  Aluminum Corp

Pay attention - limited upside

The 3 months correlation between Celanese and Aluminum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Aluminum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp and Celanese 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 Celanese are associated (or correlated) with Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Celanese i.e., Celanese and Aluminum Corp go up and down completely randomly.

Pair Corralation between Celanese and Aluminum Corp

If you would invest  13,994  in Celanese on January 20, 2024 and sell it today you would earn a total of  1,451  from holding Celanese or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Celanese  vs.  Aluminum Corp

Celanese

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Celanese are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Celanese may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Aluminum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Aluminum Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Celanese and Aluminum Corp

The main advantage of trading using opposite Celanese and Aluminum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese position performs unexpectedly, Aluminum Corp 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 Aluminum Corp will offset losses from the drop in Aluminum Corp's long position.

The idea behind Celanese and Aluminum Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.