Correlation Between Align Technology and Lupatech
Can any of the company-specific risk be diversified away by investing in both Align Technology and Lupatech 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 Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Lupatech SA, you can compare the effects of market volatilities on Align Technology and Lupatech 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 Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Lupatech.
Diversification Opportunities for Align Technology and Lupatech
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and Lupatech is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA 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 Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Align Technology i.e., Align Technology and Lupatech go up and down completely randomly.
Pair Corralation between Align Technology and Lupatech
Assuming the 90 days trading horizon Align Technology is expected to generate 0.44 times more return on investment than Lupatech. However, Align Technology is 2.29 times less risky than Lupatech. It trades about 0.21 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.09 per unit of risk. If you would invest 31,230 in Align Technology on August 26, 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 | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Lupatech SA
Performance |
| Timeline |
| Align Technology |
| Lupatech SA |
Align Technology and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Lupatech
The main advantage of trading using opposite Align Technology and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Boston Scientific | Align Technology vs. Energisa SA | Align Technology vs. BTG Pactual Logstica |
| Lupatech vs. Mitsubishi UFJ Financial | Lupatech vs. Sumitomo Mitsui Financial | Lupatech vs. Toyota Motor | Lupatech vs. Banco Santander Chile |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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