Correlation Between Alcoa Corp and EMQQ Emerging
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and EMQQ Emerging 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 EMQQ Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and EMQQ The Emerging, you can compare the effects of market volatilities on Alcoa Corp and EMQQ Emerging 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 EMQQ Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and EMQQ Emerging.
Diversification Opportunities for Alcoa Corp and EMQQ Emerging
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alcoa and EMQQ is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and EMQQ The Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMQQ The Emerging 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 EMQQ Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMQQ The Emerging has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and EMQQ Emerging go up and down completely randomly.
Pair Corralation between Alcoa Corp and EMQQ Emerging
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.11 times less return on investment than EMQQ Emerging. In addition to that, Alcoa Corp is 1.98 times more volatile than EMQQ The Emerging. It trades about 0.02 of its total potential returns per unit of risk. EMQQ The Emerging is currently generating about 0.03 per unit of volatility. If you would invest 2,987 in EMQQ The Emerging on August 26, 2024 and sell it today you would earn a total of 709.00 from holding EMQQ The Emerging or generate 23.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. EMQQ The Emerging
Performance |
| Timeline |
| Alcoa Corp |
| EMQQ The Emerging |
Alcoa Corp and EMQQ Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and EMQQ Emerging
The main advantage of trading using opposite Alcoa Corp and EMQQ Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, EMQQ Emerging 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 EMQQ Emerging will offset losses from the drop in EMQQ Emerging's long position.The idea behind Alcoa Corp and EMQQ The Emerging 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.| EMQQ Emerging vs. Invesco China Technology | EMQQ Emerging vs. Amplify Online Retail | EMQQ Emerging vs. KraneShares CSI China | EMQQ Emerging vs. Global X MSCI |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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