Correlation Between Align Technology and Wilh Wilhelmsen

Can any of the company-specific risk be diversified away by investing in both Align Technology and Wilh Wilhelmsen 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 Wilh Wilhelmsen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Align Technology and Wilh Wilhelmsen Holding, you can compare the effects of market volatilities on Align Technology and Wilh Wilhelmsen 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 Wilh Wilhelmsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Wilh Wilhelmsen.

Diversification Opportunities for Align Technology and Wilh Wilhelmsen

0.48

Correlation Coefficient

Align Technology  Wilh Wilhelmsen

Very weak diversification

The 3 months correlation between Align and Wilh is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Align Technology i.e., Align Technology and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Align Technology and Wilh Wilhelmsen

Assuming the 90 days horizon Align Technology is expected to under-perform the Wilh Wilhelmsen. In addition to that, Align Technology is 1.3 times more volatile than Wilh Wilhelmsen Holding. It trades about -0.2 of its total potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about 0.02 per unit of volatility. If you would invest  3,210  in Wilh Wilhelmsen Holding on September 28, 2024 and sell it today you would earn a total of  10.00  from holding Wilh Wilhelmsen Holding or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Align Technology  vs.  Wilh Wilhelmsen Holding

Align Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Align Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wilh Wilhelmsen Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Wilh Wilhelmsen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Align Technology and Wilh Wilhelmsen

The main advantage of trading using opposite Align Technology and Wilh Wilhelmsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Wilh Wilhelmsen 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 Wilh Wilhelmsen will offset losses from the drop in Wilh Wilhelmsen's long position.

The idea behind Align Technology and Wilh Wilhelmsen Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.