Correlation Between Alphatec Holdings and Delcath Systems

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

By analyzing existing cross correlation between Alphatec Holdings and Delcath Systems, you can compare the effects of market volatilities on Alphatec Holdings and Delcath Systems 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 Alphatec Holdings with a short position of Delcath Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphatec Holdings and Delcath Systems.

Diversification Opportunities for Alphatec Holdings and Delcath Systems

0.62

Correlation Coefficient

Alphatec Holdings  Delcath Systems

Poor diversification

The 3 months correlation between Alphatec and Delcath is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alphatec Holdings and Delcath Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delcath Systems and Alphatec Holdings 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 Alphatec Holdings are associated (or correlated) with Delcath Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delcath Systems has no effect on the direction of Alphatec Holdings i.e., Alphatec Holdings and Delcath Systems go up and down completely randomly.

Pair Corralation between Alphatec Holdings and Delcath Systems

Given the investment horizon of 90 days Alphatec Holdings is expected to under-perform the Delcath Systems. But the stock apears to be less risky and, when comparing its historical volatility, Alphatec Holdings is 1.63 times less risky than Delcath Systems. The stock trades about -0.24 of its potential returns per unit of risk. The Delcath Systems is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,122  in Delcath Systems on September 28, 2024 and sell it today you would earn a total of  75.00  from holding Delcath Systems or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Alphatec Holdings  vs.  Delcath Systems

Alphatec Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Delcath Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delcath Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Delcath Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphatec Holdings and Delcath Systems

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

The idea behind Alphatec Holdings and Delcath Systems 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.