Correlation Between Align Technology and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Align Technology and China BlueChemical 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 China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and China BlueChemical, you can compare the effects of market volatilities on Align Technology and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and China BlueChemical.
Diversification Opportunities for Align Technology and China BlueChemical
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Align and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Align Technology i.e., Align Technology and China BlueChemical go up and down completely randomly.
Pair Corralation between Align Technology and China BlueChemical
Assuming the 90 days horizon Align Technology is expected to generate 0.6 times more return on investment than China BlueChemical. However, Align Technology is 1.66 times less risky than China BlueChemical. It trades about -0.02 of its potential returns per unit of risk. China BlueChemical is currently generating about -0.01 per unit of risk. If you would invest 23,670 in Align Technology on August 31, 2024 and sell it today you would lose (1,960) from holding Align Technology or give up 8.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. China BlueChemical
Performance |
| Timeline |
| Align Technology |
| China BlueChemical |
Align Technology and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and China BlueChemical
The main advantage of trading using opposite Align Technology and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| Align Technology vs. Stryker | Align Technology vs. Insulet | Align Technology vs. Superior Plus Corp | Align Technology vs. NMI Holdings |
| China BlueChemical vs. Dalata Hotel Group | China BlueChemical vs. HANOVER INSURANCE | China BlueChemical vs. The Hanover Insurance | China BlueChemical vs. Host Hotels Resorts |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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