Correlation Between Align Technology and Fica Empreendimentos

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

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

Diversification Opportunities for Align Technology and Fica Empreendimentos

-0.35

Correlation Coefficient

Align Technology  Fica Empreendimentos

Very good diversification

The 3 months correlation between Align and Fica is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Fica Empreendimentos Imobiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fica Empreendimentos 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 Fica Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fica Empreendimentos has no effect on the direction of Align Technology i.e., Align Technology and Fica Empreendimentos go up and down completely randomly.

Pair Corralation between Align Technology and Fica Empreendimentos

Assuming the 90 days trading horizon Align Technology is expected to generate 0.58 times more return on investment than Fica Empreendimentos. However, Align Technology is 1.74 times less risky than Fica Empreendimentos. It trades about 0.09 of its potential returns per unit of risk. Fica Empreendimentos Imobiliarios is currently generating about -0.03 per unit of risk. If you would invest  30,876  in Align Technology on October 6, 2024 and sell it today you would earn a total of  1,827  from holding Align Technology or generate 5.92% return on investment over 90 days.

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

Align Technology  vs.  Fica Empreendimentos Imobiliar

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 somewhat strong essential indicators, Align Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fica Empreendimentos

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fica Empreendimentos Imobiliarios are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fica Empreendimentos may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Align Technology and Fica Empreendimentos

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

The idea behind Align Technology and Fica Empreendimentos Imobiliarios 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.