Correlation Between Bruker and Alphatec Holdings

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

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

Diversification Opportunities for Bruker and Alphatec Holdings

-0.66

Correlation Coefficient

Bruker  Alphatec Holdings

Excellent diversification

The 3 months correlation between Bruker and Alphatec is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bruker and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings and Bruker 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 Bruker are associated (or correlated) with Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of Bruker i.e., Bruker and Alphatec Holdings go up and down completely randomly.

Pair Corralation between Bruker and Alphatec Holdings

Given the investment horizon of 90 days Bruker is expected to under-perform the Alphatec Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Bruker is 2.24 times less risky than Alphatec Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Alphatec Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  603.00  in Alphatec Holdings on September 20, 2024 and sell it today you would earn a total of  349.00  from holding Alphatec Holdings or generate 57.88% return on investment over 90 days.

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

Bruker  vs.  Alphatec Holdings

Bruker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bruker has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Alphatec Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bruker and Alphatec Holdings

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

The idea behind Bruker and Alphatec Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.