Correlation Between Aluminum Corp and SAIC

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

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

Diversification Opportunities for Aluminum Corp and SAIC

-0.4

Correlation Coefficient

Aluminum Corp  SAIC

Very good diversification

The 3 months correlation between Aluminum and SAIC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum Corp of and SAIC Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAIC Motor Corp and Aluminum 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 Aluminum Corp of are associated (or correlated) with SAIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAIC Motor Corp has no effect on the direction of Aluminum Corp i.e., Aluminum Corp and SAIC go up and down completely randomly.

Pair Corralation between Aluminum Corp and SAIC

Assuming the 90 days trading horizon Aluminum Corp of is expected to generate 0.6 times more return on investment than SAIC. However, Aluminum Corp of is 1.68 times less risky than SAIC. It trades about 0.08 of its potential returns per unit of risk. SAIC Motor Corp is currently generating about -0.11 per unit of risk. If you would invest  730.00  in Aluminum Corp of on December 25, 2024 and sell it today you would earn a total of  53.00  from holding Aluminum Corp of or generate 7.26% return on investment over 90 days.

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

Aluminum Corp of  vs.  SAIC Motor Corp

Aluminum Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum Corp of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aluminum Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SAIC Motor Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAIC Motor 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aluminum Corp and SAIC

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

The idea behind Aluminum Corp of and SAIC Motor 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.