Correlation Between Alcoa Corp and AmeraMex International

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and AmeraMex International 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 AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and AmeraMex International, you can compare the effects of market volatilities on Alcoa Corp and AmeraMex International 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 AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and AmeraMex International.

Diversification Opportunities for Alcoa Corp and AmeraMex International

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Alcoa and AmeraMex is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International 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 AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and AmeraMex International go up and down completely randomly.

Pair Corralation between Alcoa Corp and AmeraMex International

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.23 times more return on investment than AmeraMex International. However, Alcoa Corp is 4.28 times less risky than AmeraMex International. It trades about 0.24 of its potential returns per unit of risk. AmeraMex International is currently generating about -0.1 per unit of risk. If you would invest  4,009  in Alcoa Corp on September 1, 2024 and sell it today you would earn a total of  634.00  from holding Alcoa Corp or generate 15.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alcoa Corp  vs.  AmeraMex International

 Performance 
       Timeline  
Alcoa Corp 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
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 unfluctuating basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.
AmeraMex International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Alcoa Corp and AmeraMex International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and AmeraMex International

The main advantage of trading using opposite Alcoa Corp and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, AmeraMex International 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 AmeraMex International will offset losses from the drop in AmeraMex International's long position.
The idea behind Alcoa Corp and AmeraMex International 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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