Correlation Between Alignment Healthcare and Micron Technology

Can any of the company-specific risk be diversified away by investing in both Alignment Healthcare and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Alignment Healthcare and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alignment Healthcare and Micron Technology.

Diversification Opportunities for Alignment Healthcare and Micron Technology

0.03

Correlation Coefficient

Alignment Healthcare  Micron Technology

Significant diversification

The 3 months correlation between Alignment and Micron is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alignment Healthcare LLC and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Alignment Healthcare i.e., Alignment Healthcare and Micron Technology go up and down completely randomly.

Pair Corralation between Alignment Healthcare and Micron Technology

Given the investment horizon of 90 days Alignment Healthcare LLC is expected to generate 0.91 times more return on investment than Micron Technology. However, Alignment Healthcare LLC is 1.09 times less risky than Micron Technology. It trades about 0.25 of its potential returns per unit of risk. Micron Technology is currently generating about 0.07 per unit of risk. If you would invest  1,061  in Alignment Healthcare LLC on December 20, 2024 and sell it today you would earn a total of  658.00  from holding Alignment Healthcare LLC or generate 62.02% return on investment over 90 days.

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

Alignment Healthcare LLC  vs.  Micron Technology

Alignment Healthcare LLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alignment Healthcare LLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, Alignment Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Micron Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alignment Healthcare and Micron Technology

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

The idea behind Alignment Healthcare LLC and Micron Technology 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.