Correlation Between Alcoa Corp and Asia Pacific

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

Diversification Opportunities for Alcoa Corp and Asia Pacific

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Alcoa and Asia Pacific is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Asia Pacific Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Wire 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 Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Wire has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Asia Pacific go up and down completely randomly.

Pair Corralation between Alcoa Corp and Asia Pacific

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.53 times more return on investment than Asia Pacific. However, Alcoa Corp is 1.89 times less risky than Asia Pacific. It trades about 0.07 of its potential returns per unit of risk. Asia Pacific Wire is currently generating about 0.03 per unit of risk. If you would invest  1,256  in Alcoa Corp on July 2, 2022 and sell it today you would earn a total of  2,222  from holding Alcoa Corp or generate 176.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alcoa Corp  vs.  Asia Pacific Wire

 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 conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Alcoa Price Channel

Asia Pacific Wire 
Asia Pacific Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Wire are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Asia Pacific sustained solid returns over the last few months and may actually be approaching a breakup point.

Asia Pacific Price Channel

Alcoa Corp and Asia Pacific Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and Asia Pacific

The main advantage of trading using opposite Alcoa Corp and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific's long position.
Alcoa Corp vs. Amazon Inc
The idea behind Alcoa Corp and Asia Pacific Wire 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.
Asia Pacific vs. Amazon Inc
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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