Correlation Between Align Technology and Livetech
Can any of the company-specific risk be diversified away by investing in both Align Technology and Livetech 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 Livetech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Livetech da Bahia, you can compare the effects of market volatilities on Align Technology and Livetech 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 Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Livetech.
Diversification Opportunities for Align Technology and Livetech
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Align and Livetech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia 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 Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of Align Technology i.e., Align Technology and Livetech go up and down completely randomly.
Pair Corralation between Align Technology and Livetech
Assuming the 90 days trading horizon Align Technology is expected to generate 0.97 times more return on investment than Livetech. However, Align Technology is 1.03 times less risky than Livetech. It trades about 0.04 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.02 per unit of risk. If you would invest 24,950 in Align Technology on August 30, 2024 and sell it today you would earn a total of 9,904 from holding Align Technology or generate 39.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Align Technology vs. Livetech da Bahia
Performance |
| Timeline |
| Align Technology |
| Livetech da Bahia |
Align Technology and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Livetech
The main advantage of trading using opposite Align Technology and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| Align Technology vs. G2D Investments | Align Technology vs. UnitedHealth Group Incorporated | Align Technology vs. STMicroelectronics NV | Align Technology vs. MAHLE Metal Leve |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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