Correlation Between Alcoa Corp and C3 Ai

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and C3 Ai 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 C3 Ai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and C3 Ai Inc, you can compare the effects of market volatilities on Alcoa Corp and C3 Ai 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 C3 Ai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and C3 Ai.

Diversification Opportunities for Alcoa Corp and C3 Ai

0.7

Correlation Coefficient

Alcoa Corp  C3 Ai

Poor diversification

The 3 months correlation between Alcoa and C3 Ai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and C3 Ai Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C3 Ai Inc 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 C3 Ai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C3 Ai Inc has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and C3 Ai go up and down completely randomly.

Pair Corralation between Alcoa Corp and C3 Ai

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 2.16 times less return on investment than C3 Ai. But when comparing it to its historical volatility, Alcoa Corp is 1.36 times less risky than C3 Ai. It trades about 0.16 of its potential returns per unit of risk. C3 Ai Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,287  in C3 Ai Inc on September 12, 2024 and sell it today you would earn a total of  1,886  from holding C3 Ai Inc or generate 82.47% 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.  C3 Ai Inc

Alcoa Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

C3 Ai Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in C3 Ai Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, C3 Ai demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and C3 Ai

The main advantage of trading using opposite Alcoa Corp and C3 Ai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, C3 Ai 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 C3 Ai will offset losses from the drop in C3 Ai's long position.

The idea behind Alcoa Corp and C3 Ai Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.