Correlation Between Alcoa Corp and Captivision Ordinary

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

By analyzing existing cross correlation between Alcoa Corp and Captivision Ordinary Shares, you can compare the effects of market volatilities on Alcoa Corp and Captivision Ordinary 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 Captivision Ordinary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Captivision Ordinary.

Diversification Opportunities for Alcoa Corp and Captivision Ordinary

0.21

Correlation Coefficient

Alcoa Corp  Captivision Ordinary

Modest diversification

The 3 months correlation between Alcoa and Captivision is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Captivision Ordinary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Captivision Ordinary 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 Captivision Ordinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Captivision Ordinary has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Captivision Ordinary go up and down completely randomly.

Pair Corralation between Alcoa Corp and Captivision Ordinary

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Captivision Ordinary. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 6.96 times less risky than Captivision Ordinary. The stock trades about -0.09 of its potential returns per unit of risk. The Captivision Ordinary Shares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Captivision Ordinary Shares on December 30, 2024 and sell it today you would lose (30.00) from holding Captivision Ordinary Shares or give up 37.97% of portfolio value over 90 days.

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

Alcoa Corp  vs.  Captivision Ordinary Shares

Alcoa Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Captivision Ordinary

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Captivision Ordinary Shares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Captivision Ordinary unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and Captivision Ordinary

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

The idea behind Alcoa Corp and Captivision Ordinary Shares 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.