Correlation Between Alcoa Corp and LIV Capital

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

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

Diversification Opportunities for Alcoa Corp and LIV Capital

-0.6

Correlation Coefficient

Alcoa Corp  LIV Capital

Excellent diversification

The 3 months correlation between Alcoa and LIV is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and LIV Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIV Capital Acquisition 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 LIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIV Capital Acquisition has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and LIV Capital go up and down completely randomly.

Pair Corralation between Alcoa Corp and LIV Capital

If you would invest  2.86  in LIV Capital Acquisition on September 15, 2024 and sell it today you would earn a total of  0.00  from holding LIV Capital Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Alcoa Corp  vs.  LIV Capital Acquisition

Alcoa Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 6 (%) 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.

LIV Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIV Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, LIV Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Alcoa Corp and LIV Capital

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

The idea behind Alcoa Corp and LIV Capital Acquisition 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.