Correlation Between Alignment Healthcare and BRP

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

By analyzing existing cross correlation between Alignment Healthcare LLC and BRP Inc, you can compare the effects of market volatilities on Alignment Healthcare and BRP 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 Alignment Healthcare with a short position of BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alignment Healthcare and BRP.

Diversification Opportunities for Alignment Healthcare and BRP

-0.47

Correlation Coefficient

Alignment Healthcare  BRP

Very good diversification

The 3 months correlation between Alignment and BRP is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alignment Healthcare LLC and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc and Alignment Healthcare 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 Alignment Healthcare LLC are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Alignment Healthcare i.e., Alignment Healthcare and BRP go up and down completely randomly.

Pair Corralation between Alignment Healthcare and BRP

Given the investment horizon of 90 days Alignment Healthcare LLC is expected to generate 1.3 times more return on investment than BRP. However, Alignment Healthcare is 1.3 times more volatile than BRP Inc. It trades about -0.01 of its potential returns per unit of risk. BRP Inc is currently generating about -0.03 per unit of risk. If you would invest  1,143  in Alignment Healthcare LLC on October 9, 2024 and sell it today you would lose (11.00) from holding Alignment Healthcare LLC or give up 0.96% of portfolio value over 90 days.

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

Alignment Healthcare LLC  vs.  BRP Inc

Alignment Healthcare LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Alignment Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alignment Healthcare and BRP

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

The idea behind Alignment Healthcare LLC and BRP Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.