Correlation Between COMBA TELECOM and Century Aluminum

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

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

Diversification Opportunities for COMBA TELECOM and Century Aluminum

-0.71

Correlation Coefficient

COMBA TELECOM  Century Aluminum

Pay attention - limited upside

The 3 months correlation between COMBA and Century is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and COMBA TELECOM 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 COMBA TELECOM SYST 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 COMBA TELECOM i.e., COMBA TELECOM and Century Aluminum go up and down completely randomly.

Pair Corralation between COMBA TELECOM and Century Aluminum

Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to generate 0.73 times more return on investment than Century Aluminum. However, COMBA TELECOM SYST is 1.38 times less risky than Century Aluminum. It trades about 0.07 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.04 per unit of risk. If you would invest  13.00  in COMBA TELECOM SYST on October 6, 2024 and sell it today you would earn a total of  1.00  from holding COMBA TELECOM SYST or generate 7.69% return on investment over 90 days.

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

COMBA TELECOM SYST  vs.  Century Aluminum

COMBA TELECOM SYST

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COMBA TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Century Aluminum

Risk-Adjusted Performance

7 of 100

OK

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. Despite nearly fragile basic indicators, Century Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMBA TELECOM and Century Aluminum

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

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.