Correlation Between Align Technology and SBI Holdings
Can any of the company-specific risk be diversified away by investing in both Align Technology and SBI Holdings 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 SBI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and SBI Holdings, you can compare the effects of market volatilities on Align Technology and SBI Holdings 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 SBI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and SBI Holdings.
Diversification Opportunities for Align Technology and SBI Holdings
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Align and SBI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings 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 SBI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Holdings has no effect on the direction of Align Technology i.e., Align Technology and SBI Holdings go up and down completely randomly.
Pair Corralation between Align Technology and SBI Holdings
Assuming the 90 days horizon Align Technology is expected to under-perform the SBI Holdings. In addition to that, Align Technology is 1.27 times more volatile than SBI Holdings. It trades about -0.17 of its total potential returns per unit of risk. SBI Holdings is currently generating about -0.05 per unit of volatility. If you would invest 2,440 in SBI Holdings on October 11, 2024 and sell it today you would lose (40.00) from holding SBI Holdings or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Align Technology vs. SBI Holdings
Performance |
| Timeline |
| Align Technology |
| SBI Holdings |
Align Technology and SBI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and SBI Holdings
The main advantage of trading using opposite Align Technology and SBI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, SBI Holdings 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 SBI Holdings will offset losses from the drop in SBI Holdings' long position.| Align Technology vs. TRADEDOUBLER AB SK | Align Technology vs. Northern Data AG | Align Technology vs. Alliance Data Systems | Align Technology vs. INFORMATION SVC GRP |
| SBI Holdings vs. VULCAN MATERIALS | SBI Holdings vs. ANGANG STEEL H | SBI Holdings vs. CALTAGIRONE EDITORE | SBI Holdings vs. Mitsubishi Materials |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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