Correlation Between Alignment Healthcare and Ansys

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

Diversification Opportunities for Alignment Healthcare and Ansys

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alignment and Ansys is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alignment Healthcare and Ansys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ansys Inc and Alignment Healthcare 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 Alignment Healthcare are associated (or correlated) with Ansys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ansys Inc has no effect on the direction of Alignment Healthcare i.e., Alignment Healthcare and Ansys go up and down completely randomly.

Pair Corralation between Alignment Healthcare and Ansys

Given the investment horizon of 90 days Alignment Healthcare is expected to generate 1.59 times more return on investment than Ansys. However, Alignment Healthcare is 1.59 times more volatile than Ansys Inc. It trades about 0.08 of its potential returns per unit of risk. Ansys Inc is currently generating about -0.05 per unit of risk. If you would invest  775.00  in Alignment Healthcare on August 31, 2022 and sell it today you would earn a total of  495.50  from holding Alignment Healthcare or generate 63.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alignment Healthcare  vs.  Ansys Inc

 Performance (%) 
       Timeline  
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 fragile performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Alignment Price Channel

Ansys Inc 
Ansys Performance
0 of 100
Over the last 90 days Ansys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ansys is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ansys Price Channel

Alignment Healthcare and Ansys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alignment Healthcare and Ansys

The main advantage of trading using opposite Alignment Healthcare and Ansys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alignment Healthcare position performs unexpectedly, Ansys 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 Ansys will offset losses from the drop in Ansys' long position.
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The idea behind Alignment Healthcare and Ansys Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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