Correlation Between Align Technology and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Align Technology and Alibaba Group 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 Align Technology and Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Alibaba Group Holding, you can compare the effects of market volatilities on Align Technology and Alibaba Group 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 Align Technology with a short position of Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Alibaba Group.
Diversification Opportunities for Align Technology and Alibaba Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Align and Alibaba is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding and Align Technology 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 Align Technology are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Align Technology i.e., Align Technology and Alibaba Group go up and down completely randomly.
Pair Corralation between Align Technology and Alibaba Group
Assuming the 90 days trading horizon Align Technology is expected to generate 0.51 times more return on investment than Alibaba Group. However, Align Technology is 1.96 times less risky than Alibaba Group. It trades about 0.21 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.35 per unit of risk. If you would invest 31,230 in Align Technology on August 27, 2024 and sell it today you would earn a total of 1,506 from holding Align Technology or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Alibaba Group Holding
Performance |
| Timeline |
| Align Technology |
| Alibaba Group Holding |
Align Technology and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Alibaba Group
The main advantage of trading using opposite Align Technology and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Align Technology vs. Monster Beverage | Align Technology vs. Metalurgica Gerdau SA | Align Technology vs. Verizon Communications | Align Technology vs. MAHLE Metal Leve |
| Alibaba Group vs. Prudential Financial | Alibaba Group vs. Agilent Technologies | Alibaba Group vs. Align Technology | Alibaba Group vs. Ameriprise Financial |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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