Correlation Between EDAP TMS and Alignment Healthcare
Can any of the company-specific risk be diversified away by investing in both EDAP TMS and Alignment Healthcare 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 EDAP TMS and Alignment Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDAP TMS SA and Alignment Healthcare LLC, you can compare the effects of market volatilities on EDAP TMS and Alignment Healthcare 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 EDAP TMS with a short position of Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and Alignment Healthcare.
Diversification Opportunities for EDAP TMS and Alignment Healthcare
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EDAP and Alignment is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of EDAP TMS i.e., EDAP TMS and Alignment Healthcare go up and down completely randomly.
Pair Corralation between EDAP TMS and Alignment Healthcare
Given the investment horizon of 90 days EDAP TMS SA is expected to under-perform the Alignment Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, EDAP TMS SA is 1.27 times less risky than Alignment Healthcare. The stock trades about -0.06 of its potential returns per unit of risk. The Alignment Healthcare LLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 756.00 in Alignment Healthcare LLC on August 24, 2024 and sell it today you would earn a total of 454.00 from holding Alignment Healthcare LLC or generate 60.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDAP TMS SA vs. Alignment Healthcare LLC
Performance |
| Timeline |
| EDAP TMS SA |
| Alignment Healthcare LLC |
EDAP TMS and Alignment Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDAP TMS and Alignment Healthcare
The main advantage of trading using opposite EDAP TMS and Alignment Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDAP TMS position performs unexpectedly, Alignment Healthcare 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 Alignment Healthcare will offset losses from the drop in Alignment Healthcare's long position.| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
| Alignment Healthcare vs. Molina Healthcare | Alignment Healthcare vs. Clover Health Investments | Alignment Healthcare vs. Centene Corp | Alignment Healthcare vs. Elevance Health |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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