Correlation Between Align Technology and Ganfeng Lithium

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

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

Diversification Opportunities for Align Technology and Ganfeng Lithium

0.57

Correlation Coefficient

Align Technology  Ganfeng Lithium

Very weak diversification

The 3 months correlation between Align and Ganfeng is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Align Technology i.e., Align Technology and Ganfeng Lithium go up and down completely randomly.

Pair Corralation between Align Technology and Ganfeng Lithium

Assuming the 90 days horizon Align Technology is expected to generate 0.66 times more return on investment than Ganfeng Lithium. However, Align Technology is 1.51 times less risky than Ganfeng Lithium. It trades about 0.01 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.0 per unit of risk. If you would invest  22,860  in Align Technology on October 9, 2024 and sell it today you would lose (2,680) from holding Align Technology or give up 11.72% of portfolio value over 90 days.

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

Align Technology  vs.  Ganfeng Lithium Co

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 nearly stable basic indicators, Align Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ganfeng Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ganfeng Lithium Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ganfeng Lithium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Align Technology and Ganfeng Lithium

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

The idea behind Align Technology and Ganfeng Lithium Co 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.