Correlation Between Align Technology and CN MODERN
Can any of the company-specific risk be diversified away by investing in both Align Technology and CN MODERN 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 CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and CN MODERN DAIRY, you can compare the effects of market volatilities on Align Technology and CN MODERN 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 CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and CN MODERN.
Diversification Opportunities for Align Technology and CN MODERN
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and 07M is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY 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 CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Align Technology i.e., Align Technology and CN MODERN go up and down completely randomly.
Pair Corralation between Align Technology and CN MODERN
Assuming the 90 days horizon Align Technology is expected to under-perform the CN MODERN. But the stock apears to be less risky and, when comparing its historical volatility, Align Technology is 2.07 times less risky than CN MODERN. The stock trades about -0.15 of its potential returns per unit of risk. The CN MODERN DAIRY is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9.15 in CN MODERN DAIRY on September 24, 2024 and sell it today you would earn a total of 1.85 from holding CN MODERN DAIRY or generate 20.22% 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. CN MODERN DAIRY
Performance |
| Timeline |
| Align Technology |
| CN MODERN DAIRY |
Align Technology and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and CN MODERN
The main advantage of trading using opposite Align Technology and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Medtronic PLC | Align Technology vs. Stryker | Align Technology vs. Boston Scientific |
| CN MODERN vs. Align Technology | CN MODERN vs. Amkor Technology | CN MODERN vs. Haier Smart Home | CN MODERN vs. American Homes 4 |
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 Stocks Directory module to find actively traded stocks across global markets.
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