Correlation Between Figs and Century Aluminum

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

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

Diversification Opportunities for Figs and Century Aluminum

-0.09

Correlation Coefficient

Figs  Century Aluminum

Good diversification

The 3 months correlation between Figs and Century is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Figs 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 Figs Inc 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 Figs i.e., Figs and Century Aluminum go up and down completely randomly.

Pair Corralation between Figs and Century Aluminum

Given the investment horizon of 90 days Figs Inc is expected to under-perform the Century Aluminum. In addition to that, Figs is 1.29 times more volatile than Century Aluminum. It trades about -0.13 of its total potential returns per unit of risk. Century Aluminum is currently generating about 0.29 per unit of volatility. If you would invest  1,667  in Century Aluminum on August 21, 2024 and sell it today you would earn a total of  557.00  from holding Century Aluminum or generate 33.41% return on investment over 90 days.

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

Figs Inc  vs.  Century Aluminum

Figs Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Figs Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Figs is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with Figs and Century Aluminum

The main advantage of trading using opposite Figs and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figs 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 Figs Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.