Correlation Between Align Technology and Patria Investments

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

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

Diversification Opportunities for Align Technology and Patria Investments

0.72

Correlation Coefficient

Align Technology  Patria Investments

Poor diversification

The 3 months correlation between Align and Patria is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Align Technology i.e., Align Technology and Patria Investments go up and down completely randomly.

Pair Corralation between Align Technology and Patria Investments

Assuming the 90 days trading horizon Align Technology is expected to under-perform the Patria Investments. In addition to that, Align Technology is 1.04 times more volatile than Patria Investments Limited. It trades about -0.29 of its total potential returns per unit of risk. Patria Investments Limited is currently generating about -0.05 per unit of volatility. If you would invest  3,544  in Patria Investments Limited on December 23, 2024 and sell it today you would lose (202.00) from holding Patria Investments Limited or give up 5.7% of portfolio value over 90 days.

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

Align Technology  vs.  Patria Investments Limited

Align Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Align Technology 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 essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Patria Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patria Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Patria Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Align Technology and Patria Investments

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

The idea behind Align Technology and Patria Investments Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.