Correlation Between Constellium and Alumina Limited

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

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

Diversification Opportunities for Constellium and Alumina Limited

0.2

Correlation Coefficient

Constellium  Alumina Limited

Modest diversification

The 3 months correlation between Constellium and Alumina is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and Alumina Limited PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumina Limited PK and Constellium 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 Constellium Nv are associated (or correlated) with Alumina Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumina Limited PK has no effect on the direction of Constellium i.e., Constellium and Alumina Limited go up and down completely randomly.

Pair Corralation between Constellium and Alumina Limited

If you would invest  369.00  in Alumina Limited PK on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Alumina Limited PK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Constellium Nv  vs.  Alumina Limited PK

Constellium Nv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellium Nv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alumina Limited PK

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Constellium and Alumina Limited

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

The idea behind Constellium Nv and Alumina Limited PK 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.