Correlation Between Century Aluminum and Qualys

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

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

Diversification Opportunities for Century Aluminum and Qualys

0.89

Correlation Coefficient

Century Aluminum  Qualys

Very poor diversification

The 3 months correlation between Century and Qualys is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Century Aluminum i.e., Century Aluminum and Qualys go up and down completely randomly.

Pair Corralation between Century Aluminum and Qualys

Given the investment horizon of 90 days Century Aluminum is expected to generate 1.77 times more return on investment than Qualys. However, Century Aluminum is 1.77 times more volatile than Qualys Inc. It trades about -0.01 of its potential returns per unit of risk. Qualys Inc is currently generating about -0.03 per unit of risk. If you would invest  2,112  in Century Aluminum on September 15, 2024 and sell it today you would lose (25.00) from holding Century Aluminum or give up 1.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Century Aluminum  vs.  Qualys Inc

Century Aluminum

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Century Aluminum showed solid returns over the last few months and may actually be approaching a breakup point.

Qualys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qualys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Qualys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Century Aluminum and Qualys

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

The idea behind Century Aluminum and Qualys Inc 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.