Correlation Between Align Technology and ZINC MEDIA

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

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

Diversification Opportunities for Align Technology and ZINC MEDIA

-0.31

Correlation Coefficient

Align Technology  ZINC MEDIA

Very good diversification

The 3 months correlation between Align and ZINC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and ZINC MEDIA GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINC MEDIA GR 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 ZINC MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINC MEDIA GR has no effect on the direction of Align Technology i.e., Align Technology and ZINC MEDIA go up and down completely randomly.

Pair Corralation between Align Technology and ZINC MEDIA

Assuming the 90 days horizon Align Technology is expected to generate 0.8 times more return on investment than ZINC MEDIA. However, Align Technology is 1.25 times less risky than ZINC MEDIA. It trades about -0.06 of its potential returns per unit of risk. ZINC MEDIA GR is currently generating about -0.15 per unit of risk. If you would invest  22,500  in Align Technology on September 22, 2024 and sell it today you would lose (1,940) from holding Align Technology or give up 8.62% of portfolio value over 90 days.

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

Align Technology  vs.  ZINC MEDIA GR

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 fragile 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.

ZINC MEDIA GR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZINC MEDIA GR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Align Technology and ZINC MEDIA

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

The idea behind Align Technology and ZINC MEDIA GR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.