Correlation Between Lupatech and Align Technology
Can any of the company-specific risk be diversified away by investing in both Lupatech and Align Technology 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 Lupatech and Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Align Technology, you can compare the effects of market volatilities on Lupatech and Align Technology 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 Lupatech with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Align Technology.
Diversification Opportunities for Lupatech and Align Technology
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lupatech and Align is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and Lupatech 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 Lupatech SA are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Lupatech i.e., Lupatech and Align Technology go up and down completely randomly.
Pair Corralation between Lupatech and Align Technology
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Align Technology. In addition to that, Lupatech is 1.59 times more volatile than Align Technology. It trades about -0.04 of its total potential returns per unit of risk. Align Technology is currently generating about 0.05 per unit of volatility. If you would invest 26,936 in Align Technology on August 26, 2024 and sell it today you would earn a total of 5,800 from holding Align Technology or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Lupatech SA vs. Align Technology
Performance |
| Timeline |
| Lupatech SA |
| Align Technology |
Lupatech and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Align Technology
The main advantage of trading using opposite Lupatech and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Lupatech vs. Mitsubishi UFJ Financial | Lupatech vs. Sumitomo Mitsui Financial | Lupatech vs. Toyota Motor | Lupatech vs. Banco Santander Chile |
| Align Technology vs. Abbott Laboratories | Align Technology vs. Boston Scientific | Align Technology vs. Energisa SA | Align Technology vs. BTG Pactual Logstica |
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 Correlations module to find global opportunities by holding instruments from different markets.
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