Correlation Between Alcoa Corp and Tinka Resources

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

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

Diversification Opportunities for Alcoa Corp and Tinka Resources

-0.67

Correlation Coefficient

Alcoa Corp  Tinka Resources

Excellent diversification

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

Pair Corralation between Alcoa Corp and Tinka Resources

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.51 times more return on investment than Tinka Resources. However, Alcoa Corp is 1.97 times less risky than Tinka Resources. It trades about 0.06 of its potential returns per unit of risk. Tinka Resources Limited is currently generating about 0.03 per unit of risk. If you would invest  3,016  in Alcoa Corp on September 12, 2024 and sell it today you would earn a total of  1,093  from holding Alcoa Corp or generate 36.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Alcoa Corp  vs.  Tinka Resources Limited

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.

Tinka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tinka Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Alcoa Corp and Tinka Resources

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

The idea behind Alcoa Corp and Tinka Resources Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.