Correlation Between Celanese and Alpha Metallurgical

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

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

Diversification Opportunities for Celanese and Alpha Metallurgical

-0.46

Correlation Coefficient

Celanese  Alpha Metallurgical

Very good diversification

The 3 months correlation between Celanese and Alpha is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Alpha Metallurgical Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Metallurgical and Celanese 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 Celanese are associated (or correlated) with Alpha Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Metallurgical has no effect on the direction of Celanese i.e., Celanese and Alpha Metallurgical go up and down completely randomly.

Pair Corralation between Celanese and Alpha Metallurgical

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Alpha Metallurgical. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 1.39 times less risky than Alpha Metallurgical. The stock trades about -0.02 of its potential returns per unit of risk. The Alpha Metallurgical Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13,596  in Alpha Metallurgical Resources on September 23, 2024 and sell it today you would earn a total of  6,530  from holding Alpha Metallurgical Resources or generate 48.03% return on investment over 90 days.

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

Celanese  vs.  Alpha Metallurgical Resources

Celanese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alpha Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Metallurgical Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Alpha Metallurgical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Celanese and Alpha Metallurgical

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

The idea behind Celanese and Alpha Metallurgical Resources 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.