Correlation Between Alcoa Corp and Nubia Brand

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

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

Diversification Opportunities for Alcoa Corp and Nubia Brand

0.67

Correlation Coefficient

Alcoa Corp  Nubia Brand

Poor diversification

The 3 months correlation between Alcoa and Nubia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Nubia Brand International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nubia Brand International 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 Nubia Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nubia Brand International has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Nubia Brand go up and down completely randomly.

Pair Corralation between Alcoa Corp and Nubia Brand

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 5.91 times more return on investment than Nubia Brand. However, Alcoa Corp is 5.91 times more volatile than Nubia Brand International. It trades about 0.04 of its potential returns per unit of risk. Nubia Brand International is currently generating about -0.58 per unit of risk. If you would invest  3,207  in Alcoa Corp on September 12, 2024 and sell it today you would earn a total of  902.00  from holding Alcoa Corp or generate 28.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.85%
Values	Daily Returns

Alcoa Corp  vs.  Nubia Brand International

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.

Nubia Brand International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nubia Brand International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Nubia Brand is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alcoa Corp and Nubia Brand

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

The idea behind Alcoa Corp and Nubia Brand International 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.