Correlation Between Alcoa Corp and KraneShares Asia
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and KraneShares Asia 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 KraneShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and KraneShares Asia Pacific, you can compare the effects of market volatilities on Alcoa Corp and KraneShares Asia 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 KraneShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and KraneShares Asia.
Diversification Opportunities for Alcoa Corp and KraneShares Asia
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and KraneShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and KraneShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Asia Pacific 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 KraneShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Asia Pacific has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and KraneShares Asia go up and down completely randomly.
Pair Corralation between Alcoa Corp and KraneShares Asia
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 14.84 times more return on investment than KraneShares Asia. However, Alcoa Corp is 14.84 times more volatile than KraneShares Asia Pacific. It trades about 0.09 of its potential returns per unit of risk. KraneShares Asia Pacific is currently generating about 0.23 per unit of risk. If you would invest 2,464 in Alcoa Corp on September 4, 2024 and sell it today you would earn a total of 2,126 from holding Alcoa Corp or generate 86.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. KraneShares Asia Pacific
Performance |
| Timeline |
| Alcoa Corp |
| KraneShares Asia Pacific |
Alcoa Corp and KraneShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and KraneShares Asia
The main advantage of trading using opposite Alcoa Corp and KraneShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, KraneShares Asia 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 KraneShares Asia will offset losses from the drop in KraneShares Asia's long position.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
| KraneShares Asia vs. iShares iBoxx Investment | KraneShares Asia vs. iShares iBoxx High | KraneShares Asia vs. iShares National Muni | KraneShares Asia vs. Invesco Emerging Markets |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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