Correlation Between Applied Genetic and Alignment Healthcare

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Can any of the company-specific risk be diversified away by investing in both Applied Genetic and Alignment Healthcare 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 Applied Genetic and Alignment Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Genetic Tech and Alignment Healthcare, you can compare the effects of market volatilities on Applied Genetic and Alignment Healthcare 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 Applied Genetic with a short position of Alignment Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Genetic and Alignment Healthcare.

Diversification Opportunities for Applied Genetic and Alignment Healthcare

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Applied and Alignment is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Applied Genetic Tech and Alignment Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare and Applied Genetic 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 Applied Genetic Tech are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare has no effect on the direction of Applied Genetic i.e., Applied Genetic and Alignment Healthcare go up and down completely randomly.

Pair Corralation between Applied Genetic and Alignment Healthcare

Given the investment horizon of 90 days Applied Genetic Tech is expected to under-perform the Alignment Healthcare. In addition to that, Applied Genetic is 1.33 times more volatile than Alignment Healthcare. It trades about -0.07 of its total potential returns per unit of risk. Alignment Healthcare is currently generating about 0.0 per unit of volatility. If you would invest  1,800  in Alignment Healthcare on July 7, 2022 and sell it today you would lose (556.00)  from holding Alignment Healthcare or give up 30.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy78.02%
ValuesDaily Returns

Applied Genetic Tech  vs.  Alignment Healthcare

 Performance (%) 
       Timeline  
Applied Genetic Tech 
Applied Performance
0 of 100
Over the last 90 days Applied Genetic Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Applied Price Channel

Alignment Healthcare 
Alignment Performance
0 of 100
Over the last 90 days Alignment Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alignment Price Channel

Applied Genetic and Alignment Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Genetic and Alignment Healthcare

The main advantage of trading using opposite Applied Genetic and Alignment Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Genetic position performs unexpectedly, Alignment Healthcare 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 Alignment Healthcare will offset losses from the drop in Alignment Healthcare's long position.
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The idea behind Applied Genetic Tech and Alignment Healthcare 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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