Correlation Between Alumina Limited and Constellium

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

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

Diversification Opportunities for Alumina Limited and Constellium

0.0

Correlation Coefficient

Alumina Limited  Constellium

Pay attention - limited upside

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

Pair Corralation between Alumina Limited and Constellium

If you would invest  997.00  in Constellium Nv on December 30, 2024 and sell it today you would earn a total of  33.00  from holding Constellium Nv or generate 3.31% return on investment over 90 days.

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

Alumina Limited PK  vs.  Constellium Nv

Alumina Limited PK

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alumina Limited PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Alumina Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Constellium Nv

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Constellium Nv are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Constellium may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alumina Limited and Constellium

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

The idea behind Alumina Limited PK and Constellium Nv 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.