Correlation Between Alcoa Corp and Vision Sensing

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

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

Diversification Opportunities for Alcoa Corp and Vision Sensing

0.31

Correlation Coefficient

Alcoa Corp  Vision Sensing

Weak diversification

The 3 months correlation between Alcoa and Vision is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Vision Sensing Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vision Sensing Acqui 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 Vision Sensing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vision Sensing Acqui has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Vision Sensing go up and down completely randomly.

Pair Corralation between Alcoa Corp and Vision Sensing

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Vision Sensing. In addition to that, Alcoa Corp is 6.63 times more volatile than Vision Sensing Acquisition. It trades about -0.04 of its total potential returns per unit of risk. Vision Sensing Acquisition is currently generating about 0.06 per unit of volatility. If you would invest  1,164  in Vision Sensing Acquisition on October 7, 2024 and sell it today you would earn a total of  6.00  from holding Vision Sensing Acquisition or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

Alcoa Corp  vs.  Vision Sensing Acquisition

Alcoa Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vision Sensing Acqui

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Alcoa Corp and Vision Sensing

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

The idea behind Alcoa Corp and Vision Sensing Acquisition 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .