Correlation Between Aquagold International and Alcoa Corp

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

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

Diversification Opportunities for Aquagold International and Alcoa Corp

0.0

Correlation Coefficient

Aquagold International  Alcoa Corp

Pay attention - limited upside

The 3 months correlation between Aquagold and Alcoa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Alcoa Corp go up and down completely randomly.

Pair Corralation between Aquagold International and Alcoa Corp

Given the investment horizon of 90 days Aquagold International is expected to generate 16.03 times more return on investment than Alcoa Corp. However, Aquagold International is 16.03 times more volatile than Alcoa Corp. It trades about 0.06 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.02 per unit of risk. If you would invest  25.00  in Aquagold International on August 31, 2024 and sell it today you would lose (24.40) from holding Aquagold International or give up 97.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Alcoa Corp

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Alcoa Corp

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and Alcoa Corp

The main advantage of trading using opposite Aquagold International and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.