Correlation Between Allegheny Technologies and Century Aluminum

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Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies 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 Allegheny Technologies and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Century Aluminum, you can compare the effects of market volatilities on Allegheny Technologies 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 Allegheny Technologies with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Century Aluminum.

Diversification Opportunities for Allegheny Technologies and Century Aluminum

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Allegheny and Century is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Century Aluminum go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Century Aluminum

Considering the 90-day investment horizon Allegheny Technologies is expected to generate 8.64 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 2.08 times less risky than Century Aluminum. It trades about 0.13 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Century Aluminum on December 29, 2023 and sell it today you would earn a total of  448.00  from holding Century Aluminum or generate 43.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Allegheny Technologies Incorpo  vs.  Century Aluminum

 Performance 
       Timeline  
Allegheny Technologies 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Allegheny Technologies Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Allegheny Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Century Aluminum 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Century Aluminum showed solid returns over the last few months and may actually be approaching a breakup point.

Allegheny Technologies and Century Aluminum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allegheny Technologies and Century Aluminum

The main advantage of trading using opposite Allegheny Technologies and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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.
The idea behind Allegheny Technologies Incorporated and Century Aluminum 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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