Correlation Between MicroPort Scientific and Alphatec Holdings

Can any of the company-specific risk be diversified away by investing in both MicroPort Scientific and Alphatec 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 MicroPort Scientific and Alphatec Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MicroPort Scientific and Alphatec Holdings, you can compare the effects of market volatilities on MicroPort Scientific and Alphatec 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 MicroPort Scientific with a short position of Alphatec Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroPort Scientific and Alphatec Holdings.

Diversification Opportunities for MicroPort Scientific and Alphatec Holdings

-0.01

Correlation Coefficient

MicroPort Scientific  Alphatec Holdings

Good diversification

The 3 months correlation between MicroPort and Alphatec is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding MicroPort Scientific and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings and MicroPort Scientific 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 MicroPort Scientific are associated (or correlated) with Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of MicroPort Scientific i.e., MicroPort Scientific and Alphatec Holdings go up and down completely randomly.

Pair Corralation between MicroPort Scientific and Alphatec Holdings

Assuming the 90 days horizon MicroPort Scientific is expected to generate 1.25 times less return on investment than Alphatec Holdings. But when comparing it to its historical volatility, MicroPort Scientific is 1.04 times less risky than Alphatec Holdings. It trades about 0.11 of its potential returns per unit of risk. Alphatec Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  665.00  in Alphatec Holdings on September 5, 2024 and sell it today you would earn a total of  335.00  from holding Alphatec Holdings or generate 50.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

MicroPort Scientific  vs.  Alphatec Holdings

MicroPort Scientific

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MicroPort Scientific are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MicroPort Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Alphatec Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroPort Scientific and Alphatec Holdings

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

The idea behind MicroPort Scientific and Alphatec Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.