Correlation Between Alcoa Corp and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Haier Smart 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 Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Haier Smart Home, you can compare the effects of market volatilities on Alcoa Corp and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Haier Smart.
Diversification Opportunities for Alcoa Corp and Haier Smart
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alcoa and Haier is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Haier Smart go up and down completely randomly.
Pair Corralation between Alcoa Corp and Haier Smart
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.62 times more return on investment than Haier Smart. However, Alcoa Corp is 1.62 times more volatile than Haier Smart Home. It trades about 0.17 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.28 per unit of risk. If you would invest 4,131 in Alcoa Corp on August 27, 2024 and sell it today you would earn a total of 416.00 from holding Alcoa Corp or generate 10.07% 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. Haier Smart Home
Performance |
| Timeline |
| Alcoa Corp |
| Haier Smart Home |
Alcoa Corp and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Haier Smart
The main advantage of trading using opposite Alcoa Corp and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.The idea behind Alcoa Corp and Haier Smart Home 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.| Haier Smart vs. La Z Boy Incorporated | Haier Smart vs. MasterBrand | Haier Smart vs. MillerKnoll | Haier Smart vs. Flexsteel Industries |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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