Correlation Between Century Aluminum and Aris Mining

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

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

Diversification Opportunities for Century Aluminum and Aris Mining

0.35

Correlation Coefficient

Century Aluminum  Aris Mining

Weak diversification

The 3 months correlation between Century and Aris is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining and Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and Aris Mining go up and down completely randomly.

Pair Corralation between Century Aluminum and Aris Mining

Given the investment horizon of 90 days Century Aluminum is expected to generate 2.71 times less return on investment than Aris Mining. In addition to that, Century Aluminum is 1.6 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  111.50  from holding Aris Mining or generate 31.5% return on investment over 90 days.

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

Century Aluminum  vs.  Aris Mining

Century Aluminum

Risk-Adjusted Performance

Weak

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

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 Century Aluminum and Aris Mining

The main advantage of trading using opposite Century Aluminum and Aris Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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 Century Aluminum 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.