Correlation Between Align Technology and China Merchants
Can any of the company-specific risk be diversified away by investing in both Align Technology and China Merchants 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 Merchants 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 Merchants Bank, you can compare the effects of market volatilities on Align Technology and China Merchants 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 Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and China Merchants.
Diversification Opportunities for Align Technology and China Merchants
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Align and China is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of Align Technology i.e., Align Technology and China Merchants go up and down completely randomly.
Pair Corralation between Align Technology and China Merchants
Assuming the 90 days horizon Align Technology is expected to generate 0.91 times more return on investment than China Merchants. However, Align Technology is 1.1 times less risky than China Merchants. It trades about 0.31 of its potential returns per unit of risk. China Merchants Bank is currently generating about 0.21 per unit of risk. If you would invest 19,875 in Align Technology on October 23, 2024 and sell it today you would earn a total of 1,715 from holding Align Technology or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Align Technology vs. China Merchants Bank
Performance |
| Timeline |
| Align Technology |
| China Merchants Bank |
Align Technology and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and China Merchants
The main advantage of trading using opposite Align Technology and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, China Merchants 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 Merchants will offset losses from the drop in China Merchants' long position.| Align Technology vs. ANTA SPORTS PRODUCT | Align Technology vs. RCS MediaGroup SpA | Align Technology vs. Ares Management Corp | Align Technology vs. Platinum Investment Management |
| China Merchants vs. Entravision Communications | China Merchants vs. Align Technology | China Merchants vs. Mobilezone Holding AG | China Merchants vs. SMA Solar Technology |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |