Correlation Between Alcoa Corp and Hanover House

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

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

Diversification Opportunities for Alcoa Corp and Hanover House

0.36

Correlation Coefficient

Alcoa Corp  Hanover House

Weak diversification

The 3 months correlation between Alcoa and Hanover is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Hanover House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover House 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 Hanover House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover House has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Hanover House go up and down completely randomly.

Pair Corralation between Alcoa Corp and Hanover House

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Hanover House. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 3.35 times less risky than Hanover House. The stock trades about -0.08 of its potential returns per unit of risk. The Hanover House is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.84  in Hanover House on December 27, 2024 and sell it today you would lose (0.20) from holding Hanover House or give up 23.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Alcoa Corp  vs.  Hanover House

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.

Hanover House

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanover House has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hanover House is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alcoa Corp and Hanover House

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

The idea behind Alcoa Corp and Hanover House 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.