Correlation Between Alcoa Corp and APPTECH CORP

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and APPTECH CORP 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 Alcoa Corp and APPTECH CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and APPTECH CORP, you can compare the effects of market volatilities on Alcoa Corp and APPTECH CORP 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 Alcoa Corp with a short position of APPTECH CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and APPTECH CORP.

Diversification Opportunities for Alcoa Corp and APPTECH CORP

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alcoa and APPTECH is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and APPTECH CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPTECH CORP and Alcoa Corp 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 Alcoa Corp are associated (or correlated) with APPTECH CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPTECH CORP has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and APPTECH CORP go up and down completely randomly.

Pair Corralation between Alcoa Corp and APPTECH CORP

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the APPTECH CORP. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 2.78 times less risky than APPTECH CORP. The stock trades about -0.05 of its potential returns per unit of risk. The APPTECH CORP is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  92.00  in APPTECH CORP on May 11, 2022 and sell it today you would lose (17.00)  from holding APPTECH CORP or give up 18.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alcoa Corp  vs.  APPTECH CORP

 Performance (%) 
       Timeline  
Alcoa Corp 
Alcoa Performance
0 of 100
Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alcoa Price Channel

APPTECH CORP 
APPTECH Performance
0 of 100
Over the last 90 days APPTECH CORP 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 fundamental indicators remain fairly strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

APPTECH Price Channel

Alcoa Corp and APPTECH CORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and APPTECH CORP

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

APPTECH CORP

Pair trading matchups for APPTECH CORP

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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