Correlation Between Celanese and Aris Mining

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

By analyzing existing cross correlation between Celanese and Aris Mining, you can compare the effects of market volatilities on Celanese and Aris Mining 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 Aris Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Aris Mining.

Diversification Opportunities for Celanese and Aris Mining

-0.44

Correlation Coefficient

Celanese  Aris Mining

Very good diversification

The 3 months correlation between Celanese and Aris is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining 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 Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Celanese i.e., Celanese and Aris Mining go up and down completely randomly.

Pair Corralation between Celanese and Aris Mining

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Aris Mining. In addition to that, Celanese is 1.35 times more volatile than Aris Mining. It trades about -0.04 of its total potential returns per unit of risk. Aris Mining is currently generating about 0.16 per unit of volatility. If you would invest  354.00  in Aris Mining on December 27, 2024 and sell it today you would earn a total of  107.00  from holding Aris Mining or generate 30.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Celanese  vs.  Aris Mining

Celanese

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aris Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Aris Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celanese and Aris Mining

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

The idea behind Celanese and Aris Mining 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.