Correlation Between SCHMID Group and Century Aluminum

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

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

Diversification Opportunities for SCHMID Group and Century Aluminum

0.26

Correlation Coefficient

SCHMID Group  Century Aluminum

Modest diversification

The 3 months correlation between SCHMID and Century is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SCHMID Group NV and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and SCHMID Group 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 SCHMID Group NV 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 SCHMID Group i.e., SCHMID Group and Century Aluminum go up and down completely randomly.

Pair Corralation between SCHMID Group and Century Aluminum

Given the investment horizon of 90 days SCHMID Group NV is expected to generate 1.18 times more return on investment than Century Aluminum. However, SCHMID Group is 1.18 times more volatile than Century Aluminum. It trades about 0.03 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.02 per unit of risk. If you would invest  323.00  in SCHMID Group NV on December 25, 2024 and sell it today you would lose (1.00) from holding SCHMID Group NV or give up 0.31% of portfolio value over 90 days.

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

SCHMID Group NV  vs.  Century Aluminum

SCHMID Group NV

Risk-Adjusted Performance

Weak

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

Century Aluminum

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Century Aluminum is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SCHMID Group and Century Aluminum

The main advantage of trading using opposite SCHMID Group and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCHMID Group 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 SCHMID Group NV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.