Correlation Between Nano X and Align Technology

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

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

Diversification Opportunities for Nano X and Align Technology

0.34

Correlation Coefficient

Nano X  Align Technology

Weak diversification

The 3 months correlation between Nano and Align is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nano X Imaging and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and Nano X 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 Nano X Imaging are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Nano X i.e., Nano X and Align Technology go up and down completely randomly.

Pair Corralation between Nano X and Align Technology

Given the investment horizon of 90 days Nano X is expected to generate 1.16 times less return on investment than Align Technology. In addition to that, Nano X is 2.25 times more volatile than Align Technology. It trades about 0.07 of its total potential returns per unit of risk. Align Technology is currently generating about 0.19 per unit of volatility. If you would invest  21,078  in Align Technology on September 5, 2024 and sell it today you would earn a total of  2,323  from holding Align Technology or generate 11.02% return on investment over 90 days.

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

Nano X Imaging  vs.  Align Technology

Nano X Imaging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nano X Imaging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nano X is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Align Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Align Technology is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nano X and Align Technology

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

The idea behind Nano X Imaging and Align 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.