Correlation Between AMAG Austria and Alcoa Corp

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

By analyzing existing cross correlation between AMAG Austria Metall and Alcoa Corp, you can compare the effects of market volatilities on AMAG Austria and Alcoa Corp 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 AMAG Austria with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMAG Austria and Alcoa Corp.

Diversification Opportunities for AMAG Austria and Alcoa Corp

-0.19

Correlation Coefficient

AMAG Austria  Alcoa Corp

Good diversification

The 3 months correlation between AMAG and Alcoa is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding AMAG Austria Metall and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and AMAG Austria 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 AMAG Austria Metall are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of AMAG Austria i.e., AMAG Austria and Alcoa Corp go up and down completely randomly.

Pair Corralation between AMAG Austria and Alcoa Corp

Assuming the 90 days horizon AMAG Austria Metall is expected to under-perform the Alcoa Corp. But the stock apears to be less risky and, when comparing its historical volatility, AMAG Austria Metall is 2.52 times less risky than Alcoa Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Alcoa Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,738  in Alcoa Corp on September 23, 2024 and sell it today you would lose (208.00) from holding Alcoa Corp or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMAG Austria Metall  vs.  Alcoa Corp

AMAG Austria Metall

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMAG Austria Metall are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AMAG Austria is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alcoa Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alcoa Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMAG Austria and Alcoa Corp

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

The idea behind AMAG Austria Metall and Alcoa Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.