Correlation Between Alpha Metallurgical and Alcoa Corp

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

Diversification Opportunities for Alpha Metallurgical and Alcoa Corp

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alpha and Alcoa is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Metallurgical Resources and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Alpha Metallurgical 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 Alpha Metallurgical Resources are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Alpha Metallurgical i.e., Alpha Metallurgical and Alcoa Corp go up and down completely randomly.

Pair Corralation between Alpha Metallurgical and Alcoa Corp

Considering the 90-day investment horizon Alpha Metallurgical Resources is expected to generate 0.84 times more return on investment than Alcoa Corp. However, Alpha Metallurgical Resources is 1.19 times less risky than Alcoa Corp. It trades about -0.3 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.46 per unit of risk. If you would invest  16,144  in Alpha Metallurgical Resources on June 30, 2022 and sell it today you would lose (3,696)  from holding Alpha Metallurgical Resources or give up 22.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alpha Metallurgical Resources  vs.  Alcoa Corp

 Performance (%) 
       Timeline  
Alpha Metallurgical 
Alpha Performance
0 of 100
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.

Alpha Price Channel

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 weak 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

Alpha Metallurgical and Alcoa Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alpha Metallurgical and Alcoa Corp

The main advantage of trading using opposite Alpha Metallurgical and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Metallurgical position performs unexpectedly, Alcoa 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.
Alpha Metallurgical vs. Sunrun Inc
The idea behind Alpha Metallurgical Resources and Alcoa 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.
Alcoa Corp vs. Kibush Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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