Correlation Between Alphatec Holdings and Globus Medical

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

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

Diversification Opportunities for Alphatec Holdings and Globus Medical

0.76

Correlation Coefficient

Alphatec Holdings  Globus Medical

Poor diversification

The 3 months correlation between Alphatec and Globus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alphatec Holdings and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical 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 Globus Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globus Medical has no effect on the direction of Alphatec Holdings i.e., Alphatec Holdings and Globus Medical go up and down completely randomly.

Pair Corralation between Alphatec Holdings and Globus Medical

Given the investment horizon of 90 days Alphatec Holdings is expected to generate 1.84 times more return on investment than Globus Medical. However, Alphatec Holdings is 1.84 times more volatile than Globus Medical. It trades about -0.04 of its potential returns per unit of risk. Globus Medical is currently generating about -0.44 per unit of risk. If you would invest  1,145  in Alphatec Holdings on November 29, 2024 and sell it today you would lose (39.00) from holding Alphatec Holdings or give up 3.41% of portfolio value over 90 days.

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

Alphatec Holdings  vs.  Globus Medical

Alphatec Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alphatec Holdings may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Globus Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globus Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Alphatec Holdings and Globus Medical

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

The idea behind Alphatec Holdings and Globus Medical 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.