Correlation Between Laboratory and Alphatec Holdings

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

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

Diversification Opportunities for Laboratory and Alphatec Holdings

0.74

Correlation Coefficient

Laboratory  Alphatec Holdings

Poor diversification

The 3 months correlation between Laboratory and Alphatec is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings and Laboratory 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 Laboratory of 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 Laboratory i.e., Laboratory and Alphatec Holdings go up and down completely randomly.

Pair Corralation between Laboratory and Alphatec Holdings

Allowing for the 90-day total investment horizon Laboratory is expected to generate 13.41 times less return on investment than Alphatec Holdings. But when comparing it to its historical volatility, Laboratory of is 3.3 times less risky than Alphatec Holdings. It trades about 0.02 of its potential returns per unit of risk. Alphatec Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  908.00  in Alphatec Holdings on December 30, 2024 and sell it today you would earn a total of  111.00  from holding Alphatec Holdings or generate 12.22% return on investment over 90 days.

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

Laboratory of  vs.  Alphatec Holdings

Laboratory

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Alphatec Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 5 (%) 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.

Pair Trading with Laboratory and Alphatec Holdings

The main advantage of trading using opposite Laboratory and Alphatec Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory 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 Laboratory of 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .