Correlation Between VITEC SOFTWARE and Align Technology
Can any of the company-specific risk be diversified away by investing in both VITEC SOFTWARE and Align Technology 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 VITEC SOFTWARE and Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VITEC SOFTWARE GROUP and Align Technology, you can compare the effects of market volatilities on VITEC SOFTWARE and Align Technology 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 VITEC SOFTWARE with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of VITEC SOFTWARE and Align Technology.
Diversification Opportunities for VITEC SOFTWARE and Align Technology
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between VITEC and Align is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding VITEC SOFTWARE GROUP and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and VITEC SOFTWARE 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 VITEC SOFTWARE GROUP are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of VITEC SOFTWARE i.e., VITEC SOFTWARE and Align Technology go up and down completely randomly.
Pair Corralation between VITEC SOFTWARE and Align Technology
Assuming the 90 days horizon VITEC SOFTWARE GROUP is expected to generate 0.73 times more return on investment than Align Technology. However, VITEC SOFTWARE GROUP is 1.37 times less risky than Align Technology. It trades about 0.05 of its potential returns per unit of risk. Align Technology is currently generating about -0.01 per unit of risk. If you would invest 3,424 in VITEC SOFTWARE GROUP on October 16, 2024 and sell it today you would earn a total of 1,046 from holding VITEC SOFTWARE GROUP or generate 30.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.68% |
| Values | Daily Returns |
VITEC SOFTWARE GROUP vs. Align Technology
Performance |
| Timeline |
| VITEC SOFTWARE GROUP |
| Align Technology |
VITEC SOFTWARE and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VITEC SOFTWARE and Align Technology
The main advantage of trading using opposite VITEC SOFTWARE and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VITEC SOFTWARE position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| VITEC SOFTWARE vs. QINGCI GAMES INC | VITEC SOFTWARE vs. Magic Software Enterprises | VITEC SOFTWARE vs. Alfa Financial Software | VITEC SOFTWARE vs. Easy Software AG |
| Align Technology vs. IMPERIAL TOBACCO | Align Technology vs. Take Two Interactive Software | Align Technology vs. British American Tobacco | Align Technology vs. SCOTT TECHNOLOGY |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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