Correlation Between Align Technology and Postal Savings
Can any of the company-specific risk be diversified away by investing in both Align Technology and Postal Savings 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 Postal Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Postal Savings Bank, you can compare the effects of market volatilities on Align Technology and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Postal Savings.
Diversification Opportunities for Align Technology and Postal Savings
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and Postal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Align Technology i.e., Align Technology and Postal Savings go up and down completely randomly.
Pair Corralation between Align Technology and Postal Savings
Assuming the 90 days horizon Align Technology is expected to generate 0.95 times more return on investment than Postal Savings. However, Align Technology is 1.05 times less risky than Postal Savings. It trades about 0.3 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.01 per unit of risk. If you would invest 19,370 in Align Technology on August 31, 2024 and sell it today you would earn a total of 2,290 from holding Align Technology or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Align Technology vs. Postal Savings Bank
Performance |
| Timeline |
| Align Technology |
| Postal Savings Bank |
Align Technology and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Postal Savings
The main advantage of trading using opposite Align Technology and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| Align Technology vs. Stryker | Align Technology vs. Insulet | Align Technology vs. Superior Plus Corp | Align Technology vs. NMI Holdings |
| Postal Savings vs. ANTA SPORTS PRODUCT | Postal Savings vs. USWE SPORTS AB | Postal Savings vs. PARKEN Sport Entertainment | Postal Savings vs. ADRIATIC METALS LS 013355 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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